Abu Dhabi, January 26, 2012

Abu Dhabi based the benchmark ADX index (ADSMI) rose for seventh consecutive day led by Telecommunication & banking sector and advanced by +14.91 points or 0.63% to reach 2,390.16 points as ADX listed companies are prepare to disclose their full-year earnings.

Throughout the day’s trade, the Abu Dhabi index (ADX) touched intraday low at 2369.47 points and intraday high at 2390.16 points; however the open index was 2375.25 points. Total traded volume was 70.81 million shares compared with a 12-month daily average of 62 million shares. Out of 28 issues traded, 11 gained price while 11 issues declined and rest of 6 issues remained unchanged.

Among the trades, the value toppers were ALDAR, ADCB, ETISALAT, FGB and SOROUH. However, the volume toppers were also ALDAR, METHAQ, ETISALAT, DANA and SOROUH.   

Among the top gainers, GCEM was up by +9.76%, SCIDC +9.09% BILDCO +6.98%, ADCB +5.69% and UNB +2.38%. Among the top losers, NBQ was down by -9.94%, FOODCO -5.33%, ESHRAQ -4.76%, RAKCEC -3.45% and RAKPROP -3.33%.

Property companies, however, are expected to show slower growth, according to analysts polled. Aldar Properties, developer of the Yas Island and Ferrari World, lost 2.2 per cent to 87 fils a share. Sorouh Real Estate, the capital\'s second biggest developer, lost 2.5 per cent to 78 fils a share.

Based on the technical analysis RSI stood around 51 points, MFI at 53 points and current index is about 1.16% lower than the 60 days simple moving average.

Meanwhile as the Abu Dhabi governmentannounced construction of  major infra structure projects in 2012, Abu Dhabi hotels reported  that they have exceeded the occupancy target.  Etihad Airways, which has recently bought major shares in Germany \'AirBerlin\' is now negotiating with Irish carrier \'Aer Lingus\'  and lately is reported to invest US$20 million (Dh73.4m) to acquire a 40 per cent stake in Air Seychelles.The Airlines is also reported to bu buy 2 more Airbus freighters for $430 million. Supporting the growth, the Abu Dhabi Tawteen Council (ADTC) Head of Strategy,planning and policy is said to confirm that 65,000 jobs in the Emirates can immediately be filled, as they plan to create 600,000 new jobs over the next decade.298,000 jobs will be created. 

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Macro-Economic Analysis

Abu Dhabi, January 26, 2012

Gross Domestic product of Abu Dhabi is expected to grow 4 per cent to reach 750 billion dirhams ($204 billion) in 2012. However, Abu Dhabi’s real GDP swelled by around 3.8 per cent in 2011 and growth was in both the hydrocarbon and non-oil sector, according to data by the Abu Dhabi Chamber of Commerce and Industry. The capital of the United Arab Emirates expects the size of its lucrative oil sector to grow to DH385 billion in 2012 from DH347 billion in 2011. Total fixed capital formation (public and private investment) in the emirate at a record high of Dh112bn in 2011, up by nearly Dh14bn from Dh98bn in 2010. The public sector\'s share of GDP is forecast to rise to Dh133 billion in 2012, up from Dh126 billion in 2011. The private sector is also estimated to growth to DH232 billion, a 6 per cent rise over 2011.

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Market Performance, 2011: United Arab Emirate, DFM & ADX

UAE stock markets witnessed a difficult year in 2011 on regional and global events and analysts predict that early part of 2012 looks to continue sentiments as Arab Spring and Eurozone crisis still need more efforts to settle down all issues.Despite all the regional and international factors, the Dubai Financial Market, or DFM, and the Abu Dhabi Securities Exchange, or ADX, performed better than regional bourses like Egypt, Bahrain and Kuwait.

In 2012, one of the major challenges for the UAE bourses is to ensure the promotion to emerging markets status by MSCI that rejected twice in 2011and authorities concerned have six months’ time to comply with all the requirements. Bourses in the country need consolidation as declining volume shows investors are looking for alternatives. Active participation is required by institutional investors to increase daily volumes of both the bourses, according to analysts.

The DFM and the ADX witnessed below 100 million shares turnover for over 150 trading days and more than 200 days, respectively, in 2011.

Arabtec Holding emerged as the most traded scrip of the year at the DFM. The property contractor witnessed 3.86 billion shares trading in 2011 followed by BurjKhalifa developer Emaar Properties, which attracted 3.05 billion shares trading. Air Arabia with 2.36 billion shares, Drake & Scull at 2.16 billion shares and DFM Company with 2.03 billion shares got place among top five traded issues in 2011.

Benchmark indices of both the bourses breached three barriers into reverse gear during the year. Abu Dhabi’s main index, which started with 2,700 plus points, ended at 2,402 points on the last trading day of the year.While the DFM index, which opened account at 1,630 points in January, closed at 1,353 on December 29, 2011.

Combined market capitalization of both the bourses fell by more than $12 billion in 2011 as ADX lost more than $7.5 billion and DFM over $5 billion, according to the data available on Arab Monetary Fund website. Dubai’s benchmark index touched a fresh seven-year low on December 27. The DFM Index lost 17 per cent at the end of the year while the ADX index finished the year with 12 per cent decline.

Short-term traders have suffered the most as the volatility and low liquidity have made entry and exit points very difficult to achieve. Long-term traders relying on fundamentals and technical have had their patience tested severely and it remains to be seen how long they can hold out before throwing in the towel.

The UAE emerged as a safe haven during Arab Spring and a lot of wealth, landed in the country, but stock markets could not get regional investors’ attention. Top businesses in the UAE, especially family-owned business empires are needed to go for public listing to give strength to local bourses.

2011 turned out to be a very difficult year for the UAE markets, but the UAE’s losses fare better when compared to regional comparisons like Egypt, Bahrain and Kuwait and even international markets like India and China. With the Arab spring, the euro crisis and the MSCI-twice rejection, the markets have had their fair share of negative triggers.

The challenge for the authorities concerned is to now ensure it can secure the promotion when MSCI’s next review takes place in June, 2012.

On December 14, MSCI announced that the MSCI UAE Index and the MSCI Qatar Index will maintain their Frontier Market status and will remain under review for potential reclassification to Emerging Markets as part of the 2012 Annual Market Classification Review.

Regarding the UAE, the feedback received since June 2011 from international institutional investors was very positive on the introduction and seamless functioning of the new delivery versus payment (DVP) model; however, investors continue to stress significant concerns over the effectiveness of this new framework to fully ensure the safeguarding of their assets under certain circumstances, according to MSCI.

MSCI’s next announcement on country classification decisions is scheduled for June 2012, in the context of the 2012 MSCI Annual Market Classification Review.

UAE banks on the whole performed well in 2011 but even though banks in the region are flush with liquidity credit growth still remains a concern at the system level. Low interest rates and government support would be instrumental in driving the credit growth in 2012 and beyond, banks in the GCC region are well capitalized with an average CAR of more than 18 per cent.

The real estate sector is showing some sign of stabilization, but analyst expects further correction in the rentals and prices but of lower magnitude. Aldar suffered as market participants raised financing concerns and questioned the business model while Emaar benefited from strong recurring revenue.

Aldar Properties surged the most in more than two years, helping to push up Abu Dhabi’s benchmark index, after the emirate’s government agreed to buy assets valued at $4.57 billion to support the company. On the last trading day of 2011, Aldar jumped 9.5 per cent, the most since December 14, 2009.

The UAE government announcement to extend the visa for the real estate investors to three years will provide some support in the long run.Overall the fiscal position of GCC economies remains strong and differs markedly from North Africa as governments can and have increased subsidies and infrastructure spending. Currently UAE market continues to trade at a discount to other emerging markets.

Around $6.3 trillion capitalization evaporated from global capital markets in 2011 on eurozone financial crisis in the second half of the year. Global stock market capitalization fell 12.1 per cent to $45.7 trillion.