DUBAI: Equity traders in the UAE are ditching expensive banking shares and opting for relatively cheaper real estate stocks. Emaar Properties shed 22 per cent from April through May and has been on a gaining streak since, up 17 per cent from the lows since then. On Monday, Emaar shares closed at Dh4.88, up 1.67 per cent. Aldar shares have been on a similar rally since May 19 after falling 17 per cent between March and first-half of May, while the construction giant Arabtec has gained 26 per cent from its low of Dh1.37 on May 20 after falling 66 per cent.
Real estate companies that have higher exposure to recurring income assets such as Emaar Malls and Aldar have done well, Vrajesh Bhandari, senior portfolio analyst with Al Mal Capital, told media. Banks are attractive from a valuation point of view; however they are more prone to geopolitical volatility, Banking peers have not been able to match the stellar performance of real estate stocks.
Abu Dhabi Commercial Bank has shed 20 per cent in value since May, but the shares have been struggling to recover. First Abu Dhabi Bank has been languishing after falling 20 per cent in May, following by a fragile recovery of 10 per cent in June. The real estate heavy Dubai Financial Market General index (DFMGI) also had a marked improvement in performance compared to the Abu Dhabi index, It has gained 7.35 per cent since January 1, while the Abu Dhabi index is up 2.58 per cent in the same period.
There does seem to be an improved investor sentiment in the UAE. Partly this could be explained by lower summer volumes and higher participation by foreigners, Bhandari said.
The Dubai index has been consistently trading above the 50-day moving average of 2,645 for the past four sessions, a situation that may have activated bulls in the market. The traded value has almost doubled. On Monday, traded value came in at Dh213 million compared to Dh117 million.
Traded value also jumped to Dh126 million from the 30-day average of Dh41 million on the Abu Dhabi Securities Exchange. Elsewhere, the Saudi Tadawul index was 0.12 per cent higher at 9,025.94. The Tadawul index has maintained its regional dominance in terms of performance with 15 per cent gains since January 1.