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MENAFN - Khaleej Times - 21/02/2010

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(MENAFN - Khaleej Times) UAE stocks will remain range-bound next week as uncertainty over Dubai World's multi-billion debt restructuring plan is likely to continue dampening sentiments in the markets already suffering post-earnings lethargy.

Fourth-quarter corporate results from major listed companies were not strong enough to lift the markets, but analysts expect at least a short-term stability aided by bonus and dividend announcements.

Analysts said any big rallies in UAE markets are unlikely as investors have squared off their positions amid speculation over Dubai World's debt restructuring plans, now expected to be made public sometime in March or April. They were of the view that day-traders will rule the markets in thin trade, as institutional and foreign investors may prefer to stay on sidelines. Investors, staying on sidelines since start of this year, were expected to give up their cautious approach, but uncertainty over Dubai World's debt restructuring kept them away, leaving equities in doldrums last week.

Aviation, Telecom in Focus
Analysts said property and banking shares are likely to trade under pressure while focus may turn to telecom and aviation stocks in the wake of expected solid corporate announcements from Emirates Airline and Emirates Integrated Telecommunications Company, or du. Bonus and cash dividend announcements from Air Arabia and etisalat expansion plan may also attract the investors in aviation and telecom stocks that will help improve trading volumes, hovered around three-week low.

Analysts are of the opinion that the investors will continue with their cautious approach that will keep markets steady in the short term.

The Dubai Financial Market's General Index is likely to remain under pressure due to lack of appetite. The index may stay range-bound between 1,600 and 1,700 levels until the investors give up their cautious approach and jump into the market to reap the benefits of strong earnings announced by some of the major listed companies.

Abu Dhabi Securities Exchange's main index likely to sustain the 2,700-level and may continue its march towards 2,800-point barrier.

"Press speculation about Dubai World has caused a panic in the market," Matthew Wakeman, EFG-Hermes Managing Director for cash and equity-linked trading, told Khaleej Times.

"It's all about uncertainty again and as we are unlikely to hear any firm news from Dubai World, it's unlikely the Dubai exchange can establish any meaningful rally from these levels," he said.

Mixed Trends
Dubai Financial Market and Abu Dhabi Securities Exchange showed mixed trend last week while bears ruled most of the time. Dubai Financial Market's General Index lost 50.21 points, or 2.99 per cent to 1,625.99 points as property and banking stocks traded under pressure and hit hard by speculation over Dubai World's debt restructuring plans.

"We won't see any meaningful inflows from international investors until this issue is resolved." said Richard Frost, head of research sales at Al Futtaim HC Securities.

Property Shares Slide
Emaar shares declined 6.19 per cent, as investors dumped the property shares amid lack of positive news on real estate sector. The company's share is likely to slip below the key barrier of Dh3 this week as it closed the week at Dh3.03 on bearish note. The share was expected to maintain a steady trend after the announcement of corporate results, but subdued reports on housing sector kept the stock under pressure last week.

Arabtech Holding, Deyaar and Union Properties also remained under pressure and closed in negative columns. Arabtec fell 6.09 per cent to Dh2.16, while Deyaar and Union Properties shares declined 3.92 per cent and 3.85 per cent, respectively. Drake and Scull International dropped 3.41 per cent to Dh0.85.

"Poor numbers from Aldar and Union Prop weighed on the property sector across both indices. Emaar's results were solid but in terms of news flow could offer little resistance to the wave of selling across the board," Wakeman said.

"Emaar's strong fourth quarter results have yet to be priced in and any positive catalyst for Dubai should see an aggressive move for the stock but when is the key question," he said.

In the banking sector, Commercial Bank of Dubai recorded a significant growth as its shares rose 4.86 per cent to Dh3.88. Other banking giants notably Emirates NBD and Dubai Islamic Bank failed to sustain the rising trend and fell across the board with Gulf Finance House led the losers in banking index by shedding 9.73 per cent to Dh1.02.

Dubai Islamic Bank shares fell 6.15 per cent and closed the week at Dh2.29, after touching as high as Dh2.50. Emirates NBD lost 2.99 per cent to Dh2.60.

Arab Insurance Group led the insurance sector last week as its shares staged a modest recovery by surging 16.48 per cent to Dh2.05 from Dh1.76. Dubai Islamic Insurance & Reinsurance Company and Takaful House fell 4.44 per cent and 3.38 per cent, respectively in subdued trading last week.

In services sector, shares in Shuaa Capital, Global Investment House and Dubai Financial Market declined across the board. Shuaa Capital shares plunged 9.60 per cent to Dh1.13 while Global Investment House and DFM declined 6.72 per cent and 5.03 per cent, respectively.

In telecom sector, du shares fell 4.68 per cent to Dh2.85.

In contrast to Dubai Financial Market, Abu Dhabi Securities Exchange maintained a rising trend last week. The benchmark index of Abu Dhabi Securities Exchange advanced 22.63 points, or 0.82 per cent, to 2,766.63 points. The benchmark index sustained psychological barrier of 2,750 points and may test 2,800-point level this week by continuing upside trend.

Foreign Investment
Dubai Financial Market said that the value of shares bought by foreign investors, or non-UAE nationals, during the week ended on February 18, reached Dh570 million comprising 47.8 per cent of the total value of stocks traded during the period.

The value of stocks sold by foreign investors during the same period reached Dh542.4 million comprising 45.5 per cent of the total value of stocks traded during the period. Net foreign investment on the market reached Dh27.6 million during the same period, as aggregate buy.

Institutional Investment
The value of stocks bought by institutional investors during last week reached Dh237.6 million comprising 19.9 per cent of the total value of stocks traded during the period. The value of stocks sold by institutional investors during the period reached Dh234 million which constitutes 19.6 per cent of the total value of stocks traded during the period. Net institutional investment on the market reached Dh3.5 million during the period, as aggregate buy.

By Muzaffar Rizvi


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