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Morgan Stanley to double upgrade UAE stocks

Morgan Stanley to double upgrade UAE stocks
UAE may shift from a funding source to a cheaper alternative for investors

Dubai – Mubasher: Morgan Stanley is looking to double upgrade the UAE stocks on the back of “early signs of a bottoming out” in the GCC nation’s real estate sector, according to analysts at the US bank and financial services firm.

The American multinational investment bank noted that UAE equities are the most oversold of any markets across Eastern Europe, the Middle East and Africa, led by the real estate shares, according to Bloomberg News.

The forward dividend yield for UAE real estate is 7.4%, above its 11-year average, analysts wrote in a report. 

“We note various contrarian indicators pointing to a potential tactical, if not structural, turning point,” Morgan Stanley said.

Analysts said that Emaar Properties’ stock hiked 14% in the last five trading sessions, especially after announcing a profit of AED 6.1 billion for the full-year 2018.  

The financial company reported that the UAE may shift from a funding source to a cheaper alternative for investors.

Accordingly, analysts predict a recovery in Emaar Properties’ share price on the back of “meaningfully better-than-expected” fourth-quarter results pushed by a “big beat” by its Emaar Development unit.

Qatari shares

As for Qatari stocks, the agency said that investors should cut their exposure to Qatar.

By the end of 2018, the general index of the Qatar Stock Exchange (QSE) hiked 21%, versus a loss of 17% for the broader MSCI emerging markets index.

“Our analysis indicates it will be the most negatively impacted in terms of passive flows from Saudi MSCI EM inclusion and China A Shares potential weight increase later this year,” analysts highlighted.

By the end of Wednesday’s session, the Dubai Financial Market’s (DFM) main index jumped 2.6%, the highest level in two years, supported by Emaar Properties’ 6.2% growth.