Even on the last trading day of 2016, best performing Gulf Finance House (GFH) shares continued to sparkle despite steady Dubai index and lower oil.

GFH shares hit a fresh 52-week high of Dh2.04 on Thursday, the highest level struck since December last year, and contributed to more than a quarter of the total volumes.

“GFH was the central theme for 2016 in our markets ... The fact that the stock has tripled in price shows that speculation activity came back to the market,” said Mohammad Ali Yasin, managing director at National Bank of Abu Dhabi Securities.

The stock has been an outperformer in the UAE, registering 309.37 per cent gains, compared to mere 11.3 per cent rise in Dubai index, and 4.6 per cent on the Abu Dhabi index.

Most of the activity in GFH came in the from the late second half.

After initial movement in the first quarter due to dividend distribution, the activity dropped month on month, until GFH started a kind of a recovery on the smaller stocks, which in a way improved the momentum and we saw this wave spread to other shares like Shuaa, Gulf Navigation, Eshraq,” Yasin said.

“The smaller companies like GFH, there is a potential for a big jump in growth which leads investors to buy them now at higher valuations than others in expectations of that growth,” he added.

Rotation:

“The shift in small stocks is a healthy rotation, and the market has more than one leaders,” said Yasin. Volumes on the UAE equity markets till early 2016 was cornered by blue chips like Emaar Properties, Dubai Islamic Bank, and National Bank of Abu Dhabi and First Gulf Bank among others.

Among other stocks that performed on the last day of 2016 were Emaar Properties, Damac, Union Properties and Al Ramz.

Emaar Properties closed 0.14 per cent lower at Dh7.13, while Union Properties closed 0.88 per cent lower at Dh1.13. Damac Properties closed 2.43 per cent higher at Dh2.53. The Dubai Financial Market General index closed 0.32 per cent higher at 3,530.88. Total volumes were at Dh700 million, higher than Dh300 million registered earlier in the week.

The Abu Dhabi Securities Exchange General index closed 1.67 per cent higher at 4,546.37.

Manazel closed steady at Dh0.58, while Eshraq Properties closed 1.96 per cent higher at Dh1.04. Etisalat closed 2.45 per cent higher at Dh18.80. Aldar Properties closed 1.54 per cent to close at Dh2.63.

Elsewhere in the Gulf, the Saudi Arabia’s Tadawul index was 0.56 per cent lower at 7,200.46, while the Qatar exchange index closed 0.97 per cent higher at 10,436.76. The Kuwait Stock Exchange index closed 0.09 per cent lower at 5,748.09.

 

2017 better for UAE equities than 2016

“This [revival in trading of small stocks] gives us hope that in 2017 we could see a continuation of this positive momentum that we saw in the last four months,” said Yasin.

“My feeling is there is no reason 2017 would not be better than 2016. The story to watch is oil prices, and lower geopolitical and interest rates movements,” said Yasin.

The positive outlook comes in the backdrop on expectations of firm oil prices, and a revival in contracts ahead of the Dubai EXPO 2020.

“The positive impact on oil prices would find its way into higher deposits at the banks, and project improving sentiments closer to Dubai EXPO 2020,” Yasin said.

Among other asset managers, Franklin Templeton has an overweight on UAE indices, and Egyptian stocks.

Bader Al Ganem, Executive Vice President and Head of MENA Asset Management, Global Investment House (Global) also agreed with NBAD’s Yasin.

“The outlook for regional equities as we enter 2017 is much better than we did in 2016 thus we as a fund house are cautiously optimistic about regional equities,” Al Ganem said.

source : gulfnews