Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
UAE stock markets made solid gains on Wednesday, as investors reacted positively to active Middle East diplomatic negotiations and the likelihood of a divided US Congress following the midterm elections.
Other Gulf markets too reacted positively to the political developments in the US.
The ADX General Index (FADGI) edged down 0.016% to close at 9,461.41. The session recorded 36,120 trades involving 487 million shares worth Dh1.648 billion.
The total market capitalisation of ADX-listed companies stood at Dh2.486 trillion.
The decline in the main index was something of an anomaly, as most blue-chip stocks made solid gains. It was driven by an unusual 5% fall in International Holding Company (IHC), the index’s largest constituent, which had a weighting of 36.59% as at October 30.
At that weight, a 1% rise or fall in IHC would move FADGI by roughly 0.366% in the same direction, assuming all other constituents remained unchanged. The precise weighting changes with share prices.
Banking stocks recorded solid gains, with Abu Dhabi Islamic Bank rising 5.94% even as the trading period for rights allocated to shareholders as part of its Dh1.75 billion rights issue commenced on Wednesday. First Abu Dhabi Bank added 3.96%, while Abu Dhabi Commercial Bank rose 2.13%.
ADNOC-linked stocks were mostly positive as the ongoing ADIPEC generated positive sentiment around the energy sector. ADNOC Gas gained 2.22%, while ADNOC Distribution rose 0.80%. ADNOC Logistics and Services slipped 0.43%, while ADNOC Drilling dropped 0.17%. Fertiglobe rose 1.84%, while Borouge remained unchanged at Dh2.29.
Real estate major Aldar was among the day’s strongest performers, rising 6.49% after remaining subdued for a while.
Among holding companies, Alpha Dhabi rose 2.2% to close at Dh6.95, while 2PointZero gained 2.6% to close at Dh1.97.
In Dubai, the Dubai Financial Market General Index (DFMGI) rose 3.956% to close at 6,040.74. The session recorded 28,660 trades, with 471 million shares changing hands for a total value of Dh2.1 billion, a notably high daily turnover on DFM.
Market breadth was positive, with 35 gainers and 11 decliners, while five stocks remained unchanged.
Real estate majors led the market rally, with Emaar Properties rising 4.41% and its subsidiary Emaar Development surging 4.89%.
The rally came amid a voluntary cash offer launched by Emaar Properties to acquire all shares in Emaar Development that it does not already own at an offer price of Dh15 per share. Emaar Development’s share price closed at Dh14.89 on Wednesday.
Banking stocks also headed north, with Emirates NBD rising 6.09%, while Dubai Islamic Bank rose 5.71%. Commercial Bank of Dubai gained 1.9%.
Telecom operator du was one of the day’s biggest gainers, rising 7.8%.
Toll-gate operator Salik gained 4%, while parking operator Parkin rose 2.9%.
Utility provider DEWA rose 1.87%. Surprisingly, food delivery platform talabat remained unchanged at Dh1.14 amid the broad market rally.
Sharjah-based airline Air Arabia rose 2.46%, amid hopes of a revival in the tourism and travel sector.
Amlak Finance and Etihad Energy were among the companies that rose more than 10% on a day when the bulls had a field day.
Wednesday’s session was a clear vote of confidence in UAE markets, said Sayed A, Chief Business Officer at Graystone Capital.
“Dubai’s 4% rise, on turnover of more than Dh2 billion, was one of the strongest single-day performances in some time,” Sayed said.
He said two external factors — regional mediation and the US midterm election results — lifted sentiment.
A gridlocked US government could limit sudden policy shifts, making Washington more predictable, Sayed said.
“For Gulf investors, lower geopolitical risk and a more predictable Washington are a supportive combination,” he said.
The flat close on ADX should not be misread, Sayed said, explaining that IHC carries a weighting of about 36.6% in the index, so its 5% decline alone subtracted roughly 1.8 percentage points from FADGI’s return.
“For the index to finish essentially unchanged, the remaining constituents collectively had to gain close to 3% on a weighted basis. Underneath the headline number, Abu Dhabi rallied strongly, led by banks,” Sayed said.
In Dubai, Emaar Properties’ Dh15-per-share offer for the remaining shares in Emaar Development sends a strong signal, he said.
“A parent company offering to buy out minority shareholders in its own subsidiary is effectively saying the business is worth more than the market has been pricing,” Sayed said.
Gains in du, Salik, Parkin, DEWA and Air Arabia showed that investors were also rewarding companies with recurring cash flows tied to the UAE’s growing population, mobility and tourism, he said.
Looking ahead, Sayed cautioned that one strong session does not establish a trend, as regional diplomacy is still evolving and volatility can return quickly.
“But the UAE’s fundamentals are solid. That gives investors good reason to stay constructive, with a selective approach focused on quality,” he added.
