UAE markets seen muted as day traders dominate

  • Share via facebook
  • Tweet this
  • Bookmark and Share

Markets in the United Arab Emirates are seen treading water on Tuesday, with little institutional appetite to increase equity exposure ahead of the year-end, leaving retail traders to chase gains in small-cap stocks.

The Dubai and Abu Dhabi benchmarks have weakened over the past month, but still are up 17.6 and 8.7 percent respectively this year, while some of the heavily traded stocks in the index such as Emaar Properties and Arabtec have gained more than 40 percent in 2012

"The low volumes in the market gives an indication that most institutional investors are waiting outside - they are probably happy with the positions they've achieved this year and are trying to lock in some gains," says Mohammed Yasin, managing director of NBAD Securities.

"The individuals in the market are mostly day traders, hence the low volumes."

These traders typically target small-cap stocks trading at less than AED1, he says.

Government changes to telecom sector taxes last week weighed on the shares of operators Etisalat and du, with the latter's slump helping drag the Dubai index below 1,600 points.

"We're trying to get back above 1,600 again before the year ends - the market will be sideways unless there's a big pick-up in volumes, which would be a surprise," says Yasin.

"There's still some interest in accumulating high dividend yield stocks and I see that continuing, but at a slower pace - it should increase from mid-January as Q4 results start to come in."

These high yield stocks include the two telecom operators, plus Abu Dhabi banks such as First Gulf Bank.

"Abu Dhabi banks are more comfortable in terms of liquidity and less provisions than those in Dubai," Yasin adds.

Related:
Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Further reading

Features & Analysis
Blood on the bourse floor

Blood on the bourse floor

Arabtec’s share price collapse was the catalyst for a huge sell...

Taking stock

Taking stock

Gulf stock markets have seen a dearth of IPOs since the global...

Steering clear of the stock markets

Steering clear of the stock markets

Listing was all the rage three years ago, but IPOs have since...

Most Popular
Most Discussed