Whats in store for the UAE stock markets?
The UAE stock markets movement has vindicated my believe during the past 20 trading sessions, wherein I’d said during last month that the DFM could slid by another 7-10% from its then level of 850…and it is at now at 762 exactly 10% down. I’d also said that the ADSM will go through a period of consolidation at its then level of 4450…and it is now at 4435.
Quote:
I believe that the DFM would take some more correction from its current level of 850 before it starts its upward move. The downside is however limited to an extent of another 7-10%.
ADSM at 4450 should do well now onwards. It has got more depth and breadth that its peer DFM, though it suffers from liquidity. I expect it will go through a period of consolidation before moving upwards, however fall of another 2-3% cannot be ruled out before the upward movement starts.
Unquote:
(From my article dated February 11, 2006)
Now million dollar question…what next???
The investors have punished the markets or rather themselves by expecting something unexpected. Even 100-150% jump in corporate profit cannot satisfy them. And worse now, with a slew of new heavyweights IPOs like EITC the same set of investors are booking profits/ loss and getting geared up for participating in the new listings.
But of late, the fall in the local markets has spread across the GCC; and during March 2006 all the markets are down except Oman (that is at breakeven).
Now with tapering of volumes at the DFM and ADSM lately, I believe that there is not much downfall left in these markets. DFM along with the ADSM will move into a consolidation phase to search for a direction, moderately upward that is. Though we cannot rule out further 3-5% negative movement, however with the current PE of around 18-19x (ttm earnings) the market looks fairly priced and stock specific positive movements is expected.
Caution!!! We need to watch closely the movement of other GCC markets, as they can give a danger signal if present across the board downturn continues for some more time…anyways we will not see any collapse. So, hold on your exposures.
Quote:
I believe that the DFM would take some more correction from its current level of 850 before it starts its upward move. The downside is however limited to an extent of another 7-10%.
ADSM at 4450 should do well now onwards. It has got more depth and breadth that its peer DFM, though it suffers from liquidity. I expect it will go through a period of consolidation before moving upwards, however fall of another 2-3% cannot be ruled out before the upward movement starts.
Unquote:
(From my article dated February 11, 2006)
Now million dollar question…what next???
The investors have punished the markets or rather themselves by expecting something unexpected. Even 100-150% jump in corporate profit cannot satisfy them. And worse now, with a slew of new heavyweights IPOs like EITC the same set of investors are booking profits/ loss and getting geared up for participating in the new listings.
But of late, the fall in the local markets has spread across the GCC; and during March 2006 all the markets are down except Oman (that is at breakeven).
Now with tapering of volumes at the DFM and ADSM lately, I believe that there is not much downfall left in these markets. DFM along with the ADSM will move into a consolidation phase to search for a direction, moderately upward that is. Though we cannot rule out further 3-5% negative movement, however with the current PE of around 18-19x (ttm earnings) the market looks fairly priced and stock specific positive movements is expected.
Caution!!! We need to watch closely the movement of other GCC markets, as they can give a danger signal if present across the board downturn continues for some more time…anyways we will not see any collapse. So, hold on your exposures.
posted by Vikas Maheshwari, CFA at 9:13 PM
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