Led by Qatar, local markets will be back in focus this week as investors consider the end of the year and an Abu Dhabi property developer approaches a major deadline.
"It is the last month of the year. Domestically, portfolio and asset managers will be measuring up the performance of their funds to benchmark indexes," said Alfred Fayek, the head of MENA region equity sales at EFG-Hermes in Dubai.
"We should start seeing some trading activity pick up and specifically from leading stocks that are part of the MSCI UAE Index and other local indexes."
UAE markets were closed yesterday for National Day and Islamic New Year celebrations and reopen today. Qatar's shares rose yesterday to the highest since October 2008 after the country's successful bid to host the 2022 FIFA World Cup. The Qatar Index, the best-performing in the GCC, closed 3.6 per cent higher at 8,477.32 points. Investors will be speculating this week on companies in the region that may benefit from the selection.
Trading has been thin recently because of a lack of local catalysts and in light of worries about the global economy. Average traded value in Abu Dhabi was about Dh130 million per day last week and about the same in Dubai.
Last week, Union National Bank (UNB) was dropped from the MSCI UAE Index. The index provider cited weak liquidity on the stock as the reason for its removal. But UNB is not the only share with minimal activity. The Abu Dhabi Securities Exchange General Index moved 0.3 per cent to 2,745.58 last week.
Aldar Properties, the capital's largest publicly traded developer, led the gains on the last day of trading last week. The developer officially opened Ferrari World Abu Dhabi last Tuesday but is also facing a major deadline on its funding.
Aldar has announced it will disclose the framework of a financial aid package from the Government before the end of the year, according to company filings in the third quarter.
"Aldar's funding gap is the short-term catalyst the market is looking for right now," said Hassan el Salah, the head of institutional trading at AlRamz Securities in Abu Dhabi. "Once the resolution is announced, we can expect the market and investors will be more relaxed." The Dubai Financial Market General Index advanced 0.2 per cent to 1,687.92 last week. Property stocks led the gains after Mohamed Alabbar, the chairman of Emaar Properties, said Dubai's excess property supply might be resolved by mid 2012. Emaar Properties advanced two fils to Dh3.67 for the week. Arabtec Holding, a Dubai contracting company, rose 1 per cent to Dh1.86. Drake & Scull, another contracting company, advanced 1 per cent to 95 fils after an announcement that it had won a contract in Saudi Arabia.
Further into the fourth quarter, investors will focus on stocks that are perceived to be paying generous dividends, Mr el Salah said. "They will be looking at stocks that will be giving the highest yield in its dividend, and any price appreciation will be a bonus."
Asset managers say local markets will continue to be influenced by international economic news. Ireland last week became the second European country to accept a financial bailout, after Greece earlier this year. "The fear [for] international markets is that this is going to spread, with Spain and Portugal next," said Marwan Shurrab, the vice president and chief trader at Gulfmena Alternative Investments in Dubai.
Elsewhere in the region last week: Kuwait's measure moved 1.1 per cent higher to 6,850.50; Bahrain's bourse rose 0.3 per cent to 1,434.12; and Oman's index rose 1.3 to 6,638.53. Qatar's measure dropped 6 per cent to 8,129.67, and the Saudi Tadawul All-Share Index moved up 0.7 per cent to 6,344.88.