Renewed global appetite for risk assets has helped send the DFM Index up 23 per cent since the start of the year.Jeff Topping / The National
Renewed global appetite for risk assets has helped send the DFM Index up 23 per cent since the start of the year.Jeff Topping / The National
Renewed global appetite for risk assets has helped send the DFM Index up 23 per cent since the start of the year.Jeff Topping / The National
Renewed global appetite for risk assets has helped send the DFM Index up 23 per cent since the start of the year.Jeff Topping / The National

World-beating first quarter just too good to last


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Dubai, Egypt and Saudi Arabia outperformed nearly all other financial markets in the world during the first quarter in a vigorous turnaround in investor confidence - but some analysts are warning that the surge now looks overdone and unsustainable.

Renewed global appetite for risk assets has helped to send the Dubai Financial Market (DFM) General Index up 21.8 per cent since the start of the year, paring losses it sustained during the Arab Spring. Saudi Arabia's Tadawul All-Share Index has gained 22 per cent, after it relaxed foreign listing rules in January, sending investor hopes soaring that the market is poised to open to a waiting flood of foreign direct investment.

In Egypt, the main EGX 30 Index - which reopened in March last year after closing for two months during the revolution that toppled Hosni Mubarak from the presidency - soared 38.5 per cent to be the quarter's second-best performer globally. It was outpaced only by a 67 per cent rise in Venezuelan shares.

All three indexes have left their closest benchmarks trailing. A more modest 12.6 per cent rise has taken place on the Dow Jones Mena (Middle East and North Africa) Index for the year to date. Similarly, the MSCI Emerging Markets Index is up 15.7 per cent.

"The only way to describe the first quarter will have to be amazing. What a comeback," says Steen Jakobsen, the chief economist at Saxo Bank. "Looking at the best-performing indices in the world, three of them are from the Middle East and North Africa."

The Abu Dhabi Securities Exchange (ADX), historically the more stable of the two UAE indexes, and which tends to lag behind the Dubai bourse, is up about 6.2 per cent since January.

"Rejuvenated retail participation in markets such as UAE, Egypt and Saudi Arabia has certainly been encouraging," says Bassel Khatoun, a portfolio manager at Franklin Templeton Investments.

However, some analysts are issuing strong notes of caution about the ability of the indexes to hold on to the gains, particularly in Dubai and post-revolution Egypt, which are regarded as lacking the stability of the Saudi financial market.

"We believe stock markets have overreacted and that the recent rally is unsustainable," says Khaled Akl, the head of research at Abu Dhabi Commercial Bank. "[While] we regard the performance of the Abu Dhabi market as more reasonable and less vulnerable to major corrections … we are more concerned regarding Dubai companies."

The Dubai construction company Arabtec, whose share price has jumped almost 90 per cent to Dh3.02 since the start of the year, reflects concerns that Dubai's gains are based on hope and speculation and are not underpinned by the fundamental soundness of the listed companies.

"The share price [is] unjustified by project wins," Mr Akl says.

UAE property companies were some of the biggest winners in the opening quarter. But Mr Jakobsen says he does not share the new-found optimism in the housing market. "The illusion of low interest rates has a tendency to create misplaced hopes for better markets," he says.

Volumes on the DFM, the Arab world's only listed bourse, nearly tripled at some stages during the quarter. Turnover for the period is expected to hit Dh17 billion (US$4.62bn), according to analysts at Al Masah Capital, the highest since the second quarter of 2010, when it was Dh22.5bn.

However, daily trading values on the DFM have recently fallen from about Dh500 million to between Dh200m and Dh400m.

"Trading volumes remain volatile," Mr Akl says. "While sometimes increasing rapidly, their recent decline suggests a potential slowdown going forward."

In Egypt, several leading secular political parties walked out of a panel drafting the country's next constitution at the end of last week amid a challenge to the committee's legitimacy, highlighting ongoing post-revolution structural uncertainty.

Deadly violence after a recent football game in Port Said also points to continued volatility in the country.

"The sporadic yet tragic outbursts of violence in Egypt serve as a stern reminder that the road to political stability will raise challenges and inevitable setbacks along the way," Mr Khatoun says. While gains on the Saudi Tadawul are generally accepted as being more solid than in other regional markets, good domestic performances by industrial and financial stocks have been boosted by government investment driven by near-record high oil prices, which analysts say could be due for a correction as global demand slows.

The price of Brent crude has increased 17.4 per cent so far this year, hitting US$126 a barrel at some points, as supply fears prompted speculative buying after political tensions with Iran led to a multilateral embargo against oil exports from the country.

Capital Economics is bearish on a continuation of this trend. "Given our view that demand from western economies will weaken, we don't expect a repeat of last year's 10 per cent rise in hydrocarbon production," says Said Hirsh, a Middle East economist at Capital Economics.

"Although pressures to increase production are currently mounting on Gulf Cooperation Council countries due to overheated energy markets, we still expect global demand to eventually slow this year," Mr Hirsh says. "In this case, Saudi and Kuwait will be most affected since there is a high correlation between their oil output and GDP growth."

A potential opening up of the Saudi market is also driving speculative gains there. Citigroup estimates foreign institutional investors could generate as much as $16bn in inflows into Saudi equities.

The Tadawul's inclusion on the MSCI Emerging Market Index could result in $3bn of inflows from passive investors tracking the broader index alone, according to Arindam Das, the regional head of HSBC Securities Services. However, there is no indication when either will take place, leaving question marks about potential rewards.

Huge positive returns this year can be partly explained by a dismal performance last year. Sovereign debt crises in Europe, rising unemployment in the United States, fears of a slowdown in China, and several revolutions in Arab states battered investor confidence, giving rise to the view that much of the first quarter's upside was catching up to previous losses.

The DFM declined by 17 per cent last year. The ADX closed the period down 11.7 per cent. The EGX 30 still has a total negative return of 28 per cent since the start of last year. In Saudi Arabia, the Tadawul lost 3 per cent. Qatar's index was the only regional bourse to gain last year, finishing the year 1.1 per cent higher.

This year, improving US economic data, indications from the US Federal Reserve that interest rates will remain near zero until late 2014, and signs that European sovereign debt pressures might be easing have prompted investors to reposition into riskier assets, particularly those that underperformed last year, says Mr Khatoun.

Graham Stock, the chief strategist at Insparo Asset Management, which focuses on frontier markets, says he expects Mena markets to be broadly supported in the near term, although this will depend on continued risk-seeking in core developed markets.

Mena markets will enjoy more stability by building strong local companies, analysts say. "The low point remains the region's inability to create and implement a reform programme which will decrease the dependence on oil and tourism," says Mr Jakobsen.

In sector terms, Mr Khatoun continues to see strong demand for businesses that address buoyant local markets as opposed to cyclical, export-driven investments with a high global correlation.

"We are encouraged by the positive signs of lending activity witnessed among banks operating in countries with a robust macro backdrop," he says. "Moreover, we continue to be tempted by consumer and retail plays wherein attractive demographics and retail spending trends underlie an exciting demand story."

UAE currency: the story behind the money in your pockets
While you're here
Stage 2 results

Caleb Ewan (AUS) Lotto Soudal 04:18:18

Sam Bennett (IRL) Deceuninck-QuickStep 00:00:02

Arnaud Demare (FRA) Groupama-FDJ 00:00:04

4 Diego Ulissi (ITA) UAE Team Emirates

5 Rick Zabel (GER) Israel Start-Up Nation

General Classification

Caleb Ewan (AUS) Lotto Soudal 07:47:19

2 Sam Bennett (IRL) Deceuninck-QuickStep 00:00:12

3 Arnaud Demare (FRA) Groupama-FDJ 00:00:16

4 Nikolai Cherkasov (RUS) Gazprom-Rusvelo 00:00:17

5 Alexey Lutsensko (KAZ) Astana Pro Team 00:00:19

The specs: 2019 Mercedes-Benz C200 Coupe


Price, base: Dh201,153
Engine: 2.0-litre turbocharged four-cylinder
Transmission: Nine-speed automatic
Power: 204hp @ 5,800rpm
Torque: 300Nm @ 1,600rpm
Fuel economy, combined: 6.7L / 100km

PROFILE OF HALAN

Started: November 2017

Founders: Mounir Nakhla, Ahmed Mohsen and Mohamed Aboulnaga

Based: Cairo, Egypt

Sector: transport and logistics

Size: 150 employees

Investment: approximately $8 million

Investors include: Singapore’s Battery Road Digital Holdings, Egypt’s Algebra Ventures, Uber co-founder and former CTO Oscar Salazar

THE BIO

Favourite place to go to in the UAE: The desert sand dunes, just after some rain

Who inspires you: Anybody with new and smart ideas, challenging questions, an open mind and a positive attitude

Where would you like to retire: Most probably in my home country, Hungary, but with frequent returns to the UAE

Favorite book: A book by Transilvanian author, Albert Wass, entitled ‘Sword and Reap’ (Kard es Kasza) - not really known internationally

Favourite subjects in school: Mathematics and science

Key facilities
  • Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
  • Premier League-standard football pitch
  • 400m Olympic running track
  • NBA-spec basketball court with auditorium
  • 600-seat auditorium
  • Spaces for historical and cultural exploration
  • An elevated football field that doubles as a helipad
  • Specialist robotics and science laboratories
  • AR and VR-enabled learning centres
  • Disruption Lab and Research Centre for developing entrepreneurial skills
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%3Cp%3EHigh%20fever%20(40%C2%B0C%2F104%C2%B0F)%3Cbr%3ESevere%20headache%3Cbr%3EPain%20behind%20the%20eyes%3Cbr%3EMuscle%20and%20joint%20pains%3Cbr%3ENausea%3Cbr%3EVomiting%3Cbr%3ESwollen%20glands%3Cbr%3ERash%26nbsp%3B%3C%2Fp%3E%0A
The White Lotus: Season three

Creator: Mike White

Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell

Rating: 4.5/5

COMPANY PROFILE
Company name: BorrowMe (BorrowMe.com)

Date started: August 2021

Founder: Nour Sabri

Based: Dubai, UAE

Sector: E-commerce / Marketplace

Size: Two employees

Funding stage: Seed investment

Initial investment: $200,000

Investors: Amr Manaa (director, PwC Middle East) 

Jetour T1 specs

Engine: 2-litre turbocharged

Power: 254hp

Torque: 390Nm

Price: From Dh126,000

Available: Now

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MOST%20POLLUTED%20COUNTRIES%20IN%20THE%20WORLD
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2024%20Dubai%20Marathon%20Results
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FIXTURES

All kick-off times UAE ( 4 GMT)
Brackets denote aggregate score

Tuesday:
Roma (1) v Shakhtar Donetsk (2), 11.45pm
Manchester United (0) v Sevilla (0), 11.45pm

Wednesday:
Besiktas (0) v Bayern Munich (5), 9pm
Barcelona (1) v Chelsea (1), 11.45pm

ICC T20 Rankings

1. India - 270 ranking points

 

2. England - 265 points

 

3. Pakistan - 261 points

 

4. South Africa - 253 points

 

5. Australia - 251 points 

 

6. New Zealand - 250 points

 

7. West Indies - 240 points

 

8. Bangladesh - 233 points

 

9. Sri Lanka - 230 points

 

10. Afghanistan - 226 points

 
How being social media savvy can improve your well being

Next time when procastinating online remember that you can save thousands on paying for a personal trainer and a gym membership simply by watching YouTube videos and keeping up with the latest health tips and trends.

As social media apps are becoming more and more consumed by health experts and nutritionists who are using it to awareness and encourage patients to engage in physical activity.

Elizabeth Watson, a personal trainer from Stay Fit gym in Abu Dhabi suggests that “individuals can use social media as a means of keeping fit, there are a lot of great exercises you can do and train from experts at home just by watching videos on YouTube”.

Norlyn Torrena, a clinical nutritionist from Burjeel Hospital advises her clients to be more technologically active “most of my clients are so engaged with their phones that I advise them to download applications that offer health related services”.

Torrena said that “most people believe that dieting and keeping fit is boring”.

However, by using social media apps keeping fit means that people are “modern and are kept up to date with the latest heath tips and trends”.

“It can be a guide to a healthy lifestyle and exercise if used in the correct way, so I really encourage my clients to download health applications” said Mrs Torrena.

People can also connect with each other and exchange “tips and notes, it’s extremely healthy and fun”.

Ziina users can donate to relief efforts in Beirut

Ziina users will be able to use the app to help relief efforts in Beirut, which has been left reeling after an August blast caused an estimated $15 billion in damage and left thousands homeless. Ziina has partnered with the United Nations High Commissioner for Refugees to raise money for the Lebanese capital, co-founder Faisal Toukan says. “As of October 1, the UNHCR has the first certified badge on Ziina and is automatically part of user's top friends' list during this campaign. Users can now donate any amount to the Beirut relief with two clicks. The money raised will go towards rebuilding houses for the families that were impacted by the explosion.”

While you're here
RoboCop%3A%20Rogue%20City
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Credits

Produced by: Colour Yellow Productions and Eros Now
Director: Mudassar Aziz
Cast: Sonakshi Sinha, Jimmy Sheirgill, Jassi Gill, Piyush Mishra, Diana Penty, Aparshakti Khurrana
Star rating: 2.5/5

Liverpool 4-1 Shrewsbury

Liverpool
Gordon (34'), Fabinho (44' pen, 90' 3), Firmino (78')

Shrewsbury
Udoh (27'minutes)

Man of the Match: Kaide Gordon (Liverpool)

THE BIO

Bio Box

Role Model: Sheikh Zayed, God bless his soul

Favorite book: Zayed Biography of the leader

Favorite quote: To be or not to be, that is the question, from William Shakespeare's Hamlet

Favorite food: seafood

Favorite place to travel: Lebanon

Favorite movie: Braveheart

Honeymoonish
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The biog

Favourite Emirati dish: Fish machboos

Favourite spice: Cumin

Family: mother, three sisters, three brothers and a two-year-old daughter

Profile of Tamatem

Date started: March 2013

Founder: Hussam Hammo

Based: Amman, Jordan

Employees: 55

Funding: $6m

Funders: Wamda Capital, Modern Electronics (part of Al Falaisah Group) and North Base Media