UAE equities advance by 4%

Last week UAE equities took the centre stage in the Gulf stock markets, and posted a healthy 4% rise in the main UAE Index to 1164.44.

This rise contrasted with less lively performance in the rest of the GCC, with Kuwait giving back earlier gains to close up 1.5%, Qatar up 2.9% and Oman ahead by 1.9%.

Financial services, the largest component of the UAE market, showed the strongest performance and the sub-index was ahead 13.9% between June 1 and 6. Mashreqbank was particularly in favour, and rose by 15% to Dhs690. The National Bank of Umm Al Quwain also gained 10% to Dhs270.

However, the biggest losers were also in the banking sector. The Abu Dhabi Commercial Bank lost 5% to Dhs497.50 and the First Gulf Bank was down 3.75% at Dhs3.85.

Property was also out of favour. Emaar Properties lost 25fils to close at Dhs20.60. Investors remain unimpressed with Emaar despite very strong sales at its core projects in Dubai which will surely boost 2002 profits.

But traders now expect the UAE stock market to settle into its traditional summer snooze with little movement in volumes and prices. The weakness of the US dollar has left local investors unfazed, despite its impact on the value of dirham holdings like local stocks.

Only if the Federal Reserve chose to defend the dollar with higher interest rates would the UAE stock market react. Indeed, the outlook for the autumn must be a further bull run as local share ratings are undemanding and the range of alternative options around the world is still unattractive.