ID :
97284
Tue, 12/29/2009 - 14:18
Auther :
Shortlink :
https://oananews.org//node/97284
The shortlink copeid
UAE stock markets grow in 2009
Dubai, Dec 29, 2009 (WAM)- The UAE stock markets saw modest growth in 2009 as the global liquidity crisis and Dubai's own debt restructuring led to a fall in confidence among investors and any bull run on the markets became an opportunity for profit-taking, which capped gains and led to under performance according to a report in "Gulf News".
On November 25, in a surprise announcement, Dubai World asked creditors for a "standstill" on paying back its $60 billion (Dh220 billion) loan until at least May, which shook stock markets worldwide, including the UAE. The news dealt a blow to local bourses that were on a recovery path, leading to a flight of investors.
The damage was contained to an extent after the government of Dubai announced on December 14 that Dubai World would repay a $4.1 billion sukuk due the same day after receiving support from the government of Abu Dhabi and the UAE Central Bank. Dubai World remains in talks with its creditors while restructuring $22 billion of debt.
DFM gains
Despite the fallout from the news, the Dubai Financial Market index had risen eight per cent to 1,769.27 as of Sunday from 1,636.29 on December 31, last year. The Abu Dhabi Securities Exchange index rose 12.8 per cent in the same period to 2,696.05 from 2,390.01. The two markets are expected to end the year in positive territory, despite investor interest currently being low.
In other countries in the Gulf Cooperation Council, the stock market indices saw high volatility. Trading volumes on bourses shrank and there was heavy selling pressure all around.
Institutional investors shunned riskier emerging-market assets, dumping more stocks than they bought. Much of the surplus cash with investors went into buying gold, which took its value to new highs.
"For all of 2009, the UAE markets remained weak because of the turmoil in the international market," said Mousa Haddad, head trader with the National Bank of Abu Dhabi Asset Management.
"We are now trading in a downtrend market, which is negative. There's low volume and no investor interest in buying stocks."
He said that to be back in an uptrend market, the DFM index will have to break the 2,200 level on high volume and the ADX general index will have to break the 2,980 level.
Haddad said in the near term the Dubai market may retest 1,460 levels again and Abu Dhabi 2,400 — its strongest support level.
"Any move on the upside is an opportunity to sell because the markets will move lower in the days ahead," said Haddad.
Regarding other regional markets, he said, sentiment remains largely bearish for bourses in Saudi Arabia, Qatar and Kuwait.
However, other analysts differ from Haddad.
Moving sideways
Nabeel Farhat, partner with Al Fajer Securities, said the UAE markets will move sideways near term with a bias to move up next year.
"We remain positive for 2010. We expect the UAE's gross domestic product to grow by nine per cent in 2010 on the back of an anticipated 25 per cent increase in oil revenue. Most of the growth will come from Abu Dhabi," said Farhat.
He said historically, there has been a correlation between oil prices and the stock markets. The markets tend to rise in tandem with the oil prices.
"The global oil prices averaged $63 per barrel this year. Next year, we are looking at an average oil price of $73 a barrel which should take the UAE's oil export revenue to around $255 billion from $190 billion projected for 2009," he added.
On November 25, in a surprise announcement, Dubai World asked creditors for a "standstill" on paying back its $60 billion (Dh220 billion) loan until at least May, which shook stock markets worldwide, including the UAE. The news dealt a blow to local bourses that were on a recovery path, leading to a flight of investors.
The damage was contained to an extent after the government of Dubai announced on December 14 that Dubai World would repay a $4.1 billion sukuk due the same day after receiving support from the government of Abu Dhabi and the UAE Central Bank. Dubai World remains in talks with its creditors while restructuring $22 billion of debt.
DFM gains
Despite the fallout from the news, the Dubai Financial Market index had risen eight per cent to 1,769.27 as of Sunday from 1,636.29 on December 31, last year. The Abu Dhabi Securities Exchange index rose 12.8 per cent in the same period to 2,696.05 from 2,390.01. The two markets are expected to end the year in positive territory, despite investor interest currently being low.
In other countries in the Gulf Cooperation Council, the stock market indices saw high volatility. Trading volumes on bourses shrank and there was heavy selling pressure all around.
Institutional investors shunned riskier emerging-market assets, dumping more stocks than they bought. Much of the surplus cash with investors went into buying gold, which took its value to new highs.
"For all of 2009, the UAE markets remained weak because of the turmoil in the international market," said Mousa Haddad, head trader with the National Bank of Abu Dhabi Asset Management.
"We are now trading in a downtrend market, which is negative. There's low volume and no investor interest in buying stocks."
He said that to be back in an uptrend market, the DFM index will have to break the 2,200 level on high volume and the ADX general index will have to break the 2,980 level.
Haddad said in the near term the Dubai market may retest 1,460 levels again and Abu Dhabi 2,400 — its strongest support level.
"Any move on the upside is an opportunity to sell because the markets will move lower in the days ahead," said Haddad.
Regarding other regional markets, he said, sentiment remains largely bearish for bourses in Saudi Arabia, Qatar and Kuwait.
However, other analysts differ from Haddad.
Moving sideways
Nabeel Farhat, partner with Al Fajer Securities, said the UAE markets will move sideways near term with a bias to move up next year.
"We remain positive for 2010. We expect the UAE's gross domestic product to grow by nine per cent in 2010 on the back of an anticipated 25 per cent increase in oil revenue. Most of the growth will come from Abu Dhabi," said Farhat.
He said historically, there has been a correlation between oil prices and the stock markets. The markets tend to rise in tandem with the oil prices.
"The global oil prices averaged $63 per barrel this year. Next year, we are looking at an average oil price of $73 a barrel which should take the UAE's oil export revenue to around $255 billion from $190 billion projected for 2009," he added.
