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The Dubai stock market appears set to continue rising despite growing concerns over the Delta variant and volatile oil prices, an analyst said Monday.
Most GCC bourses posted some gains in the beginning of the week after hitting a setback in the previous session, with Abu Dhabi gaining 0.6 percent and Dubai rising by 0.9 percent. The region’s stocks further rose on Monday.
“While global economic uncertainties are expected to remain, the Dubai Financial Market (DFM) will likely continue to climb, thanks to strong national fundamentals,” said Daniel Takieddine, senior market analyst at online forex trading firm FXPrimus.
“The main index is anticipated to extend the positive trend it started at the beginning of the month.” And even if the oil will retreat again, the UAE’s economy will be less affected, thanks to its more diversified profile and lower reliance on the energy sector.
Among those likely to move to the upside, Aramex could find support from weak oil over the short term, as low oil prices are likely to reduce operating costs. Solid regional fundamentals should also help the company continue its operations at sustainable levels.
Aramex’s stock price has been on a slight downtrend for most part of the year.
As for Union Properties, which has seen its stock price stagnate for a few months, there will be an improvement in operations as economic fundamentals continue to improve and demand for properties increase, Takieddine said in note.
Elsewhere in the GCC region, indices will remain exposed to several factors, including oil prices. Oil prices had been on a losing streak for about a week before rising 0.9 percent on Monday.
However, Takieddine maintained that this week’s US crude inventory figures will likely add more pressure on oil prices, as well as the lower anticipated data releases in all major economies.
“Various US and European indicators including price indices, business climate and home sales are forecast lower than before,” he said.
As of early trade on Monday, most Gulf stocks moved higher on the back of higher oil prices. Brent crude was up $1.23 or 1.9 percent to 66.41 a barrel by 0701 GMT, according to Reuters.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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