UAE indices up less than 1% after Sunday plunge

28/06/2016 02:14 AST

Equity markets in the GCC showed some recovery on Monday as bargain-hunters started buying on the dips following the plunge seen on Sunday on the back of the Brexit.

In the UAE, the Dubai Financial Market (DFM) index ended 0.85 per cent higher at 3,285.76 after rising over one per cent in the first hour after trade began. This comes after the index fell as much as 4.7 per cent on Sunday only a few minutes after trade began, and ended the day 3.2 per cent lower.

In Abu Dhabi, the benchmark index was up 0.4 per cent to end at 4,434.23 after falling 1.85 per cent on Sunday.

Analysts have said since the Brexit vote was announced that the UK’s decision to leave the EU shouldn’t have a significant direct impact on the UAE. However, the impact is expected to come through negative investor sentiment that has a ripple impact to UAE-based investors.

“Fundamentally speaking, the Brexit shouldn’t really have a huge impact on the UAE. On Sunday, even when the DFM index fell, it didn’t reach new lows, so I don’t really see much of a risk from the Brexit on the UAE markets,” said technical analysts, Osama Al Ashry. He pointed, though, that if foreign investors leave the UAE market as they become risk-averse because of the Brexit, then that could lead to a strong decline in the market.

“For now, the index seems to be in consolidation because it’s not near its resistance levels and it’s not near its support levels either, and I expect this consolidation to continue for some time. The DFM index has its first support level at 3,044 and first resistance level at 3,479,” Al Ashry said.

On DFM, Dubai Parks jumped 4.7 per cent, Emaar rose 0.33 per cent, Arabtec gained 1.52 per cent, and Dubai Islamic Bank ended 0.2 per cent higher. Union Properties was also up 1.84 per cent, as Hits Telecom surged 10.05 per cent.

The performance in Dubai is in complete contrast with European equities where the only colour to be seen anywhere is red as share prices tank in the double-digit range. For Al Ashry, this is an opportunity.

“Even if you look at European markets, I think it’s sentiment more than anything else that triggering so much buying activity. The UK anyway won’t leave the EU formally for another two years, so we won’t really see the actual impact of the Brexit until then.

The drop in Europe provides buying opportunities, so actually, my advice would be to buy shares. Yes, it’s definitely a risky move but I do recommend buying,” he said.

Gulfnews