Monday, Sep 05, 2016

Dubai: Investors are preferring to invest in UAE stocks as the best macro story, leading investment bank EFG Hermes said on Monday.

The Dubai Financial Market General index has been the best performing gauge with 12.54 per cent gains so far in the year, followed by Abu Dhabi index with more than 4 per cent gains.

“UAE stands out in Mena [Middle East and North Africa] as relatively the best macro story, despite difficulty in stock selection due to concentration of banks and real estate names,” EFG Hermes said in an emailed note.

EFG Hermes met 38 institutions in the UAE, Riyadh, and London last week. Investor interest remained weak on the Qatar index, and interest remained negative on Saudi Arabia, EFG Hermes added.

Meanwhile, Arqaam Capital expects the Qatar index to correct more on the downside despite foreign buying due to the FTSE upgrade.

Net foreign buying already reached $915 million (Dh3.36 billion) so far in the year, still shy of the $1.2 billion seen at the same point of the MSCI upgrade in May 2014.

Jaap Meijer expects the FTSE upgrade to draw $415 million, in comparison to $1.3 billion estimated for the MSCI upgrade in 2014. The second phase in March 2017 should result in another $415 million.

“Only a few stocks still provide an upside: We see an average downside of -0.4 per cent for our stocks under coverage, with as much as 15-30 per cent downside seen for a hand full of stocks. We see only more than 10 per cent upside in 3 stocks,” Meijer said.

Staff Report

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