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UAE stocks top GCC peers – Analysis

UAE stocks top GCC peers – Analysis

By: Mahmoud Gamal

Dubai – Mubasher: The UAE-listed stocks are currently the best in the region in terms of investments attraction amid the unstable trend seen by the GCC bourses, according to analysts.

The bearish trend witnessed by some of the GCC stock markets, topped by the Dubai Financial Market (DFM), since the beginning of the year has made the Emirati stock prices more attractive after their price/earnings ratios decreased, analysts said.


Investment opportunity

Osama Al Ashri, member of British organisation Society of Technical Analysts (STA), said that the UAE’s twin bourses are still able to resume the upward trend as their price/earnings ratio reached low levels, which made them more attractive than some of the GCC-listed stocks that need correction.

It is worth noting that the DFM is currently trading at its lowest levels in years, while the Abu Dhabi Securities Exchange (EGX) is hitting record highs.

Purchases in some of the DFM-listed stocks are not high-risk for long- and medium-term investors, Al Ashri stressed.

The DFM, which is currently experiencing the weakest performance in five years, is likely to see a bullish trend on the back of listed-firms announcements of annual financial results, he projected.

The evaluations of the UAE stock markets are more attractive than the other markets in the Gulf, as well as the Emirati economy is much better than the other economies in the region as it does not suffer any loss in the state budget, he said.

Al Ashri added that selling pressures have weighed on the GCC markets and made blue-chip stocks to hit their lowest level, indicating that this is a good opportunity for traders to invest in stocks with positive evaluations.

He stressed that the Saudi Stock Exchange (Tadawul) and Boursa Kuwait are technically suffering from inflated profitability after becoming saturated, which will lead them to correction movements over the coming period.


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Market recession

The GCC stock markets are witnessing a period of recession ahead of firms’ disclosures of annual profits and cash dividend distributions, Al Ashri said.

He also attributed the thin liquidity in most of the GCC bourses to a number of factors, mainly the plunge in global stock markets.

Moreover, he highlighted the GCC markets have been negatively impacted by the sharp decline of 20% seen by Dow Jones at the end of 2018, as well as by the fall in oil prices below $50.


Image result for Dubai Financial Market



For his part, senior financial analyst at Menacorp Financial Services Issam Kassabieh said that investors are still cautious about trading in the GCC markets, particularly the UAE’s bourses, due to thin liquidity in the markets.

Investors are anticipating listed-companies to post their annual financial results and cash dividend payments, which will be a key catalyst for boosting investors’ interest in the markets over the coming weeks, Kassabieh added.

He further noted that the global landscape and oil prices will also remain a main factor in directing stock markets in the region, especially after crude oil prices recovered again.

Some investors are concerned over the real estate sector in the UAE amid the drop in property prices in Dubai, which may affect dividend distributions’ plans for the sectors’ companies, mainly Damac Properties, the senior financial analyst remarked.


Translated by: Mai Ezz El-Din