Dubai’s Index Has Best Quarter In Six Years

Most regional markets slipped on Monday as fears of a U.S. government shutdown spurred slight profit-taking, but Dubai’s bourse booked its biggest quarterly gain in nearly six years.

Dubai’s index shed 0.3 per cent, easing off Sunday’s near five-year high. That trimmed its third-quarter gain to 24.3 per cent, its best performance since late 2007. Trading volume in the quarter was the highest in four years.

Shares in Dubai were boosted during the quarter by heavy retail investor activity after index compiler MSCI upgraded the United Arab Emirates and Qatar to emerging market status, which is expected to bring in fresh funds worth about $500 million to each country.

A recovery in the local real estate market, and expectations that Dubai will this November win the right to host the World Expo 2020, are also buoying the market, which is up 70 per cent year-to-date.

“There’s some pull-back, mainly on uncertainty about increasing allocations with the fears affecting international markets,” Marwan Shurrab, fund manager and head of trading at Vision Investments, said of Monday’s trade.

A Reuters survey of fund managers published on Monday found many wary of the size of Dubai’s gains, with a plurality saying they expected to reduce allocations to the emirate in the next three months.

But retail investor interest in Dubai is so high that its momentum may continue for a while. It again outperformed global markets on Monday; MSCI’s emerging market index was down 1.2 per cent.

Despite the global jitters, “I see the markets continuing their major uptrend going into year-end, supported by key factors like Q3 earnings. Expect to see more inflows with regards to MSCI emerging market positioning,” Shurrab added.

In Saudi Arabia, the index ticked up 0.2 per cent from a two-week low, bucking a downbeat regional trend. It climbed for a third consecutive quarter, gaining 6.2 per cent in the three months – its strongest quarterly rise since early 2012.

The Reuters survey of fund managers found them very bullish on Saudi Arabia, with 75 per cent expecting to increase their allocations there in the next three months and none expecting to cut allocations.

In Egypt, the benchmark index fell 0.8 per cent to 5,621 points, extending declines from Thursday’s seven-month high. It failed to confirm a break of chart resistance at 5,682 points, the August peak.

“We saw some healthy profit-taking after the strong run we had,” said Islam Batrawy, deputy director of sales and trading at Egypt’s Naeem Brokerage. “People are taking some cash off, plus we tracked the selling pressure from global markets.

“Most probably, we will consolidate around current levels and trade sideways in coming days in the range of 5,600-5,500.”

Kuwait’s index slipped 0.5 per cent, but blue chips outperformed smaller stocks because of end-of-quarter “window dressing” by funds. The Kuwait 15 sub-index, comprised mainly of blue chips, gained 0.5 per cent.

The wider benchmark was flat for the quarter, after seeing two consecutive quarters of double-digit percentage gains.