In the previous month, UAE financial markets defied the global and regional equity downtrend, as indicated by a recent report. According to Kamco Invest’s GCC Markets Monthly report, GCC equity markets experienced their first decline in three months, influenced by the worst monthly performance in global equity markets this year.
The MSCI World index fell by 3.6% in August 2023, following concerns of prolonged higher interest rates due to a hawkish Fed, with some economists even factoring in another rate hike this year and further cuts into the next. Weak data from China also weighed on sentiments, compounded by the likelihood of the ECB continuing to raise rates in September 2023.
The MSCI GCC Index witnessed a slightly steeper decline of 3.8% during the month, led by falls in four out of seven exchanges, including Saudi Arabia. Qatar experienced the largest decline in the GCC in August 2023, with a 7.0% slide, followed by Kuwait and Bahrain with declines of 3.4% and 2.0%, respectively.
Saudi Arabia’s TASI declined by 1.7%. The declines in Qatar erased all gains for the year, reporting the largest decline in the GCC at 4.6%, followed by Abu Dhabi and Kuwait, both with 3.9% declines. In contrast, Dubai emerged as the best-performing market with a year-to-date gain of 22.4%, followed by Saudi Arabia at 9.7%.
The GCC sector chart displayed declines in most sectors, with Healthcare leading at -11.6%, followed by F&B and Telecom. Banks and Material sectors decreased by 3.9% and 2.9%, respectively, while Insurance and Energy sectors showed gains of 5.9% and 4.4%. The DFM General Index gained 0.6% during the month, while the FTSE ADX index rose 0.2%.
The DFM General Index recorded a monthly gain of 0.6% in August 2023, marking its fifth consecutive monthly gain. The index’s performance was mixed during the month, with five out of eight indices witnessing declines, while the remaining three saw gains.
The Consumer Staples Index recorded the largest monthly gain for the second consecutive month, with 7.4% growth, mainly due to Emirate Refreshments’ nearly 6.9% price increase.
The Industrial index followed as the second-largest gainer, with 4.5% growth, driven by share price rises in the sector, particularly Air Arabia Company. The Real Estate index also saw a gain of 2.7%, mainly due to an 18% share price jump for Al Mazaya Holding Company. In contrast, the Communications Services index was the largest decliner among the indices, recording a 3.6% decline.
In terms of monthly stock performance, Al Mazaya Holding led the monthly gainers table with an 18% increase in share price, followed by Emirates Investment Bank and Ekttitab Holding Properties with gains of 11.2% and 11%, respectively.
On the decliners’ side, Takaful Insurance Co. topped the table with a 25.6% share price decline during the month, followed by Aramex and Dubai Islamic Insurance Co. with share price declines of 15.3% and 13.3%, respectively.
Trading activity in the DFM declined in August 2023, with total volume traded falling by 41.3% to 5.3 billion shares and the total value of shares traded dropping by 13.8% to Dh9.9 billion compared to July 2023.
Union Properties had the highest monthly traded volumes for the second month in a row, with 1.2 billion shares traded, followed by Ajman Bank and Shuaa Capital with 570.6 million and 476.4 million shares changing hands, respectively.
Emaar Properties topped the monthly value traded chart with Dh1.6 billion worth of shares changing hands during the month, followed by Ajman Bank and Emirates NBD, with Dh1.3 billion and Dh1.27 billion in value of shares traded, respectively.
In economic news, Dubai’s economic growth accelerated in 2023, supported by strong tourism numbers and a robust real estate market. Dubai’s Real GDP recorded a 2.8% year-on-year increase during Q1-2023, reaching Dh111.3 billion ($30.3 billion).
The contribution of various sectors to the economy included the Transportation and Storage Sectors, which witnessed overall growth of 48%, followed by the Financial and Insurance sectors, recording growth of 15%.
The DFM also witnessed the creation of over 34,800 new investor accounts in the first eight months of 2023, compared to 23,000 new investor accounts during the same period in 2022.
The FTSE ADX index edged up by 0.2% during August-2023, closing the month at 9,810.2 points and marking its third consecutive monthly gain. In terms of sectoral indices, five out of ten sectors recorded growth during the month, while the remaining five recorded declines.
The Healthcare index witnessed the largest monthly gain, registering 19.3% growth, followed by the Consumer Discretionary index with an 11.7% gain. On the decliners’ side, the Telecommunications index led the way with a 10.8% slide, followed by the Consumer Staples index, which saw a 3.4% fall.
Burjeel Holdings topped the monthly gainers chart for August-2023 with a gain of 27.5%, followed by Waha Capital and Umm Al Qaiwain General Investment Co. with gains of 23.5% and 22.5%, respectively. On the decliners’ side, Ooredoo registered the largest decline, with a 11.5% fall in share price, followed by Etisalat and Eshraq Investments, which saw share price declines of 11.4% and 9.9%, respectively.
Trading activity increased month-on-month for the second consecutive month in August-2023. Total volume of shares traded rose by 4.1% to reach 5.4 billion, compared to 5.2 billion in July-2023. Similarly, total value of traded shares increased by 15.5% to reach Dh23.3 billion.
The UAE’s non-oil foreign trade reached its highest ever point at $337.6 billion during the first half of 2023, recording a 14.4% year-on-year growth rate. China topped the UAE’s list of top global trading partners, followed by India, USA, Saudi Arabia, and Turkey.
The UAE’s total non-oil exports increased by 11.9% to reach Dh205 billion ($55.8 billion) during 1H-2023, while the total value of re-exports and imports also witnessed a 9.9% increase to $92.8 billion.
UBS predicts the UAE’s economy will expand by 3.5% in 2023 and 3.9% in 2024, driven by strong demand for hydrocarbon exports and energy investments. The introduction of a 9% corporate tax in 2023 and a 5% VAT in 2018 is expected to support the UAE’s public finances and reduce its reliance on energy exports.