By: Mahmoud Gamal
Dubai – Mubasher: Positive forecasts for companies’ third quarter financial results have increased, particularly those pertaining to banks, analysts told Mubasher, indicating that these projections will boost UAE stocks higher in the coming sessions.
On Wednesday, the Dubai Financial Market (DFM) closed in the green, adding 0.8% to 3,598.65 points, whereas the Abu Dhabi Securities Exchange (ADX) slipped 0.17% to end at 4,433.72 points.
Liquidity in the UAE’s two bourses has just begun to improve, particularly that of the real estate sector, Eyad Al Bareeqy, general manager at Al-Ansari Financial Services (AFS), told Mubasher.
Real estate stocks, particularly Arabtec Holding and Drake & Scull International (DSI) have acquired most of the DFM’s liquidity since the start of the month, the analyst said.
The main reason for the rising investor confidence was the positive forecasts for the banking and real estate sectors, he added.
UAE real estate companies’ profits increased in the first six months of 2017 by around 32% to a combined AED 3.5 billion, while banks’ profits rose 4% to AED 19.2 billion during the same period. Analysts told Mubasher that they forecast positive results in Q3-17.
Arabtec’s successful restructure, followed by DSI’s, have given a significant boost to investor confidence and to profit forecasts, Al Bareeqy said, noting that the two companies’ recently announced awards will also boost the sector’s overall profitability.
From a technical perspective, traders and investors are looking to see if the DFM will close above its first resistance at 3,600 points, vice president of investment research at KAMCO Raed Diab said.
Closing above resistance will prompt the DFMGI towards further gains near 3,625 points, he told Mubasher.
The analyst forecast that support at 3,540 will prevent the DFM’s benchmark index from falling, but in the event of a drop below support, the index will decline towards 3,500 and 3,465 points.
As for the ADX, Diab sees first resistance at 4,445 points, and passing it would boost the index towards 4,465 points.
The analyst warned that the ADX would need to close above 4,485 or 4,510 points to reduce the risk of declines.
Translated by: Nada Adel Sobhi
