31/12/2015 07:31 AST
Despite a drop over two per cent in the prices of Brent crude oil that slumped towards 11-year lows, the UAE’s equity markets were not too volatile, with the benchmark indexes moving less than one per cent each on Wednesday.
The Dubai Financial Market (DFM) index rose 0.49 per cent to reach 3,150.25 as liquidity was slightly higher, reaching Dh539 million.
Meanwhile, the Abu Dhabi Securities Exchange (ADX) general index slid 0.47 per cent to reach 4,276.14.
Analyst Osama Al Ashry said that the markets are currently in corrections, expecting the indexes to reach new lows in the first quarter of 2016.
“I think we might see the DFM index at 2,500 in 2016, so I wouldn’t recommend buying activity right now because the market is still trading in high-risk areas. The DFM index hasn’t been able to cross its resistance levels of 3,289 and 3,444. If it does cross them, the market will be in a safe range, but I doubt it will,” he said.
Al Ashry, a member of UK organisation, Society of Technical Analysts, pointed that despite the relatively stronger liquidity on DFM, the index only moved around 0.5 per cent, meaning that most traders did not retain shares at the end of the day.
He added that over 50 per cent of trade was concentrated on Arabtec, Gulf Finance House, and Amlak alone, which are all speculative stocks.
“I expect Brent oil prices to reach new lows in 2016, and I think this will take a toll on all the GCC’s equity markets and take indexes to new lows. You also have to consider that in Q1 2016 companies will be announcing their financial results, which are expected to be lower and even include some losses for companies like Arabtec, for example.
Couple this with geopolitical tension and the war in Yemen and of course, the markets won’t react well,” Al Ashry said.
He expected markets to bounce back in the second half of 2016, however, as they would have been oversold by then.
Gulfnews
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