Analysis: UAE stock market correction in June was overdue | The National

Analysis: UAE stock market correction in June was overdue | The National:



"In June, Mena markets with the exception of Oman declined across the board, Abu Dhabi fell 13.4 per cent, Dubai 22.5 per cent, Saudi Arabia 3.2 per cent, Qatar 16.1 per cent, Egypt 1.0 per cent and Kuwait 4.4 per cent; meanwhile Oman gained 2.2 per cent.



In our view after a sustained rally over the past 18 months a correction was due. One needs to place the correction in context and it should be remembered that the recent rally in the markets was supported by strong underlying fundamentals, positive sentiment over the MSCI inclusion and interest from foreign investors. 




Catalysts for the recent correction were escalation of violence in Iraqi, margin calls and deleveraging, post-MSCI-upgrade profit-taking and concerns regarding Arabtec. Focus will be now on Q2 earnings and we don’t expect any significant negative surprises. The higher oil price remains supportive for regional economies and the UAE historically benefits from a safe haven status in the event of rising regional tensions. The real estate and construction sector in the UAE had a difficult month, with the Dubai Financial Market real estate and construction index ending down by 30.5 per cent against the DFM General Index, which was down by 22.5 per cent. Despite the decrease in share price for UAE real estate companies, at the business level the Dubai real estate market there were new projects launched, notably from Emaar, Nakheel, and Damac and they have received overwhelmingly positive responses from customers. During Cityscape, there were also new project launches in Abu Dhabi, including a number by Aldar Properties. However, it should be noted that property prices in Dubai are leveling out because of higher mortgage caps and increased transfer fees imposed by governmental bodies."



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