Optimism on UAE recovery

A growing sense of optimism over the recovery of the UAE's property and banking sectors helped markets rise yesterday, although thin volumes showed a lack of conviction behind the gains.

That led some to wonder whether the trading volume drought experienced last summer had returned already. The Abu Dhabi Securities Exchange General Index rose 0.36 per cent to 2,607.53, while the Dubai Financial Market General Index rallied 0.72 per cent to 1,545.42.

Some of the day's winners were Emaar Properties, which rose 1.96 per cent to D3.12 a share, and Arabtec, which rallied 3.15 per cent to Dh1.31.

Banks also gained, with Abu Dhabi Commercial Bank rising 2.5 per cent to Dh2.79. Meanwhile, National Bank of Fujairah hit its upwards trading limit of 10 per cent at Dh3.63, although only 4,000 shares traded. News that Barclays Bank had started foreclosure auctions was contributing to a growing sense the UAE's property slide was reaching the bottom, investors said, while positive economic data were also boosting the banking sector.

"We're seeing [Emirates interbank offered rates] dropping and some banks are resetting mortgage rates," said Yazan Abdeen, a fund manager at ING Investment Management.

"We'll see reduced cost of lending, and this will also trigger further demand."

However, volumes remained thin, with few catalysts to stir markets.

"There's been no major fundamental news," said Talal Touqan, the head of equity research at Al Ramz Securities. "What's prevailing is pure sentiment."

Trades remained sluggish as a result of worries over lingering euro-zone debt issues, he said.

But the lack of trading activity unsettled some traders, who warned the summer dry spell of low volumes could have arrived already.

ghunter@thenational.ae