By: Mahmoud Gamal
Dubai – Mubasher: There are 10 ways to overcome the volatile trend currently seen by the UAE stock markets amid thin liquidity, analysts told Mubasher.
The local bourses have seen weak trades recently although companies have reported significant profits for the first quarter of 2018 and the UAE economic growth rate has accelerated, analysts explained, adding that the GCC country is globally praised for its real estate projects and preparations for the 2020 Expo.
Traders on the UAE’s twin bourses are looking for the simplest solutions to avoid losses; therefore analysts have set 10 keys to guide investors in the meantime.
Strong economy
The UAE bourses have witnessed more than 7% losses since the beginning of this year; hence, the local bourses are not among the global declining stock markets whose rate is set starting from 20%, member of the National Advisory Board of Chartered Institute for Securities and Investments (CISI) Wadah Al-Taha said.
The local stock markets are currently shrugging off listed-firms’ annual financial results and their significant dividends, he indicated.
The markets are also ignoring the country’s economic growth, which all the global institutions praise amid expectations of thriving and attracting tourists, he highlighted, adding that the 2020 Expo, to be held in Dubai, is projected to lure visitors.
Remarkable impact
Investors have been highly impacted by some of the external factors related to the geopolitical scene in the region, Al-Taha said, pointing out that they should have become more experienced to deal with these situations.
Recent sell-offs on the UAE bourses were driven by psychological impact, which negatively affected the indices of the stock markets during the trading sessions of Q1-18, he added.
Hesitation and concern currently dominate the investors, pushing them to sell-off or buy on the same stock more than once a day, he remarked.
The local stock markets are currently witnessing a state of recession due to speculations by traders as they are targeting quick gains to compensate losses, Al-Taha noted, attributing this to thin liquidity.
Traders should distribute their investments on more than one stocks to diminish risks, he recommended, noting that they should also keep around 20% to 30% of liquidity outside the stock markets.
Investors should avoid buying on margin in the meantime as it would bring huge losses, he added.
Al-Taha said that traders who are willing to invest in the UAE bourses in the long-term should not sell on Emirati stocks.
He also warned investors to ignore fictitious recommendations that aim to promote some stocks with no operational basis.
Translated by: Mai Ezz El-Din
