Positive news coming from some UAE companies and the calming down of the situation in Lebanon led to a very strong improvement in prices and trading volumes on the two UAE exchanges, said Middle East monthly market report.
The August issue of the report which was issued by Rasmala Investment, a Dubai based company focused on asset management and investment banking, said trading volumes and gains were very much concentrated in market leader Emaar which represented some 70% of total trading volumes on some days.
This greater investor interest and an attractive price is likely to drive it’s price higher in the coming months as investor sentiment improves. The Abu Dhabi market lagged the Dubai market in terms of trading volumes and price appreciation as investors favored stocks such as Emmar and Amlak over Abu Dhabi listed stocks, said the report.
The cement sector also performed well as news of the ceasefire in Lebanon lead to cement companies such as Gulf Cement, Union Cement and National Cement showing gains for the month as investors are anticipating a rising demand for the commodity when the rebuilding of the war-torn country begins, added the report.
Profits on the whole grew by a very meager 3% over the same period last year, the study quoted an analysis of first half 2006 corporate profit releases.
"A closer look at the results however, shows that leading corporate with good stock market liquidity, good core earnings and sizable market capitalization had profit growth of around 37%." The insurance sector, which heavily relies on the stock market, the report said, saw an 82% decrease in profits year on year which emphasis the importance of focusing on fundamentally sound companies with sustainable core earnings.