Some observers see reason for optimism in the recent numbers posted by the UAE stock markets, but will the healthy trend continue?
Some observers see reason for optimism in the recent numbers posted by the UAE stock markets, but will the healthy trend continue?

From worst to first



Global markets have staged a dramatic recovery in recent weeks, easing the sense of desperation that had engulfed them, if not quite replacing it with something altogether cheerful. The prevailing mood is one of caution and uncertainty, but investors may be content with that, considering that not long ago they were certain that conditions were as grim as they could possibly be. Another significant change is that the UAE market has been one of the strongest in the Middle East after trailing the region - and nearly every bourse in the world - last year. An MSCI Barra index of UAE stocks is up 32 per cent so far in 2009.

Performances for MSCI country indexes elsewhere in the Middle East vary widely, from a roughly 10 per cent gain for Saudi Arabia to a loss exceeding 20 per cent for Qatar. The UAE has also handily surpassed the returns of key mature markets around the world. The United States and Britain were recently down about 5 per cent so far this year, while Japan and markets across Continental Europe showed losses of about 10 per cent.

However, unless they plunked down their money only in the past few months, UAE shareholders may want to rein in their enthusiasm. Indexes in popular emerging markets, including India, Brazil and Russia, have recorded double-digit percentage gains. Much more demoralising, the recent strength of the local market is but the merest of blips on a long-term chart. The MSCI UAE index stands nearly 70 per cent lower than 12 months ago.

Still, the result was far better than investors would have dared hope as February began. Economic and financial conditions were still growing worse and the long bear market continued to decimate portfolios. MSCI UAE bottomed at 192 on Feb 4. Its level of 253.6 on May 5 markesa 32 per cent increase. Indexes in other countries hit bottom later in the quarter but showed similar bounces. It is hard to know for sure what caused the turnaround. Duncan Richardson, the chief equity investment officer at Eaton Vance, a Boston fund management company, attributed it in part to a newfound faith in the ability of political leaders to "do whatever it takes to rescue the economy, and that rescues the stock market."

Timothy Geithner, the new US treasury secretary, had been criticized for announcing plan after plan to get the US economy and financial system moving again, each with few details that investors could latch onto. He went from goat to hero on March 23 when he detailed a programme to provide incentives for private investors to take hundreds of billions of dollars in toxic assets off the hands of banks. That ignited a 7 per cent rally that day on Wall Street and led to gains on bourses around the world.

But Komal Sri-Kumar, chief global strategist at TCW Group, part of the French bank Societe Generale, thinks there is less to the new programme than meets the eye. "While this is a good start on the part of Geithner, and people could make lot of money, the amount is still small relative to the size of toxic assets on banks' books," he said. "I don't think this provides the solution people are looking for."

Authorities in many parts of Europe and Asia implemented policy initiatives of their own, including guarantees of bank debt, injections of capital into the financial system or purchases of corporate or government debt to stimulate economic growth. Investors in those countries likewise remained fairly unimpressed for a while and then suddenly decided to give officials the benefit of the doubt. The global rally could have been due simply to the fact that shares had been beaten up so badly that they were due for a bounce. That may be especially true for emerging markets, which performed far worse in 2008 than their counterparts in mature economies.

"Emerging markets really took it on the chin last year, so it isn't that much of a shock that they have been more resilient this year," said Ben Inker, head of asset allocation at the Boston fund manager GMO. But there may be more to it than that. While shares in the West may have benefited from a belief that authorities were coming to grips with myriad woes, those in emerging economies may have held up so well because they avoided those woes in the first place.

"The fundamentals are better in emerging markets," said Mark Mobius, executive chairman of Templeton Asset Management. "It's not like during the Asia crisis [in the late 1990s], where countries were broke because of their dollar debt. This time we have a situation where they're sitting on foreign currency reserves." He also noted that debt levels in relation to economic output are much lower in developing countries than mature ones and that growth rates tend to be much higher. The same holds true for businesses, he said. The UAE's performance, the downs and ups, may be tied to the fact that it is like other emerging markets, only more so because of oil.

The UAE scores near the top on many of the criteria that Mr Mobius cited. Foreign reserves, per capita, are among the highest in the world, if not at the very top, as are its fiscal and current accounts. The country also ranks near the head of the list on some of the key negatives that investment professionals highlight. The easy availability of credit fuelled a property boom in Dubai that rivaled few other places. "One word of caution rests with the level of overall debt in the UAE private and public sectors and, more specifically, with bad-debt provisioning in the banking sector, which remains to be clarified," said John McGaw, chief executive of the Dubai office of Killik & Co, a British brokerage firm.

The continued unwinding of the speculative excess played a large role in pushing UAE shares to fresh lows. So did the plunge in crude oil to less than $35 a barrel, roughly 75 per cent below the peak reached last summer. Mr Sri-Kumar suspects that the catalysts for the first-quarter turnaround were the recovery in oil and the government's response to the credit difficulties, particularly the assistance that Abu Dhabi rendered to Dubai in February through a US$10 billion (Dh36.7bn) Dubai bond sale to the UAE Central Bank.

The state of the financial and property sectors in the flashier emirate "is clearly less acute than it was," he said. "The question was not whether Abu Dhabi had the resources but whether it would come to the rescue." That question has been answered in the affirmative, at least so far, and Mr Sri-Kumar said that that might bring in badly needed private funding from international institutions like Goldman Sachs and HSBC.

Whatever is in store for economies and markets around the world, the near future is bound to treat some of them more kindly than others. Identifying the potential winners could be difficult, however, because investment advisors offer divergent, often antithetical, forecasts. Mr Sri-Kumar envisions the United States in the ascendancy. It was the first major economy to head into the abyss, he said, and it so it should be the first to catch sight of daylight.

By contrast, Blaze Tankersley, the chief market strategist at Bay Crest Partners, an institutional brokerage in New York, prefers Asian markets for their fiscal wherewithal. "Think of them as stocks," he advised. "General Electric is highly levered and in need of capital, while Singapore and Hong Kong have net cash reserves. Here's the guy who's got some money, got some room to work with. Those markets are likely to be far better investments than the US overall."

As for the UAE, its oil wealth gives authorities some leeway, yet many investment advisors remain sceptical of the market's ability to make further progress. Tom Connolly, head of asset management for the Middle East and Africa at BNY Mellon, calls the recent resilience "more of a dead-cat bounce than a sustainable rally." "The UAE market is impacted to a large extent by what is happening to markets internationally and also what is happening in the local economy," he said. "Neither of these factors is improving at the moment. The market leads improvements in the economy in most cases, but I think this rally is early."

But over the long haul, the abundance of oil should help the market and others in the region, in his view. "The next few months will continue to be difficult," Mr Connolly warned, "but the underlying fundamentals here are stronger than most other emerging markets because of the petroleum-related growth in the region. . . . The question mark is how the banking system and the local economy will deal with the declining housing market and what many see as an overcapacity in housing."

While he is wary of banking and property, he said he likes telecommunications for its defensive characteristics. Michael Hartnett, an international strategist at Merrill Lynch, said in a recent research note that he finds Middle East markets "very cheap", with valuations at nearly a 30 per cent discount to those in the broad universe of emerging markets. But he expressed concerns about the health of UAE banks.

Mr Hartnett prefers markets like Qatar and Saudi Arabia. Two stocks that he said Merrill's analysts recommend are Qatar Electricity & Water, which he called "a solid defensive monopolistic play", and the large Saudi petrochemical concern SABIC. Mr McGaw, at Killik, also believes that conditions warrant a defensive posture. "There is still a question mark over the extent to which Dubai's cash-flow position will deteriorate in 2009 against a backdrop of deflating asset prices, slowing population growth and declining bank profitability," he said.

His caution is limiting his interest to shares of companies with strong balance sheets and cash flow, such as Air Arabia; the port operator DP World; Aramex, a transportation and logistics concern; Emirates Telecommunications and the Abu Dhabi power generation company Taqa. Mr McGaw, though cautious, is not gloomy. He highlighted a couple of hopeful factors that suggest to him that UAE stocks are forming a base that could lead to higher prices in the second half of the year.

"Recent increases in trading volumes indicate selective buying for longer-term purposes," he said. Also, "the fact that Abu Dhabi and Dubai are joined at the hip is a stabilising factor." Conrad de Aenlle, who is based in Los Angeles, has covered business and investment topics for nearly 20 years

In numbers: PKK’s money network in Europe

Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010

Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille

Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm

Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year

Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”

Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners

TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013 

A MINECRAFT MOVIE

Director: Jared Hess

Starring: Jack Black, Jennifer Coolidge, Jason Momoa

Rating: 3/5

CHINESE GRAND PRIX STARTING GRID

1st row 
Sebastian Vettel (Ferrari)
Kimi Raikkonen (Ferrari)

2nd row 
Valtteri Bottas (Mercedes-GP)
Lewis Hamilton (Mercedes-GP)

3rd row 
Max Verstappen (Red Bull Racing)
Daniel Ricciardo (Red Bull Racing)

4th row 
Nico Hulkenberg (Renault)
Sergio Perez (Force India)

5th row 
Carlos Sainz Jr (Renault)
Romain Grosjean (Haas)

6th row 
Kevin Magnussen (Haas)
Esteban Ocon (Force India)

7th row 
Fernando Alonso (McLaren)
Stoffel Vandoorne (McLaren)

8th row 
Brendon Hartley (Toro Rosso)
Sergey Sirotkin (Williams)

9th row 
Pierre Gasly (Toro Rosso)
Lance Stroll (Williams)

10th row 
Charles Leclerc (Sauber)
arcus Ericsson (Sauber)

Skewed figures

In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458. 

How to increase your savings
  • Have a plan for your savings.
  • Decide on your emergency fund target and once that's achieved, assign your savings to another financial goal such as saving for a house or investing for retirement.
  • Decide on a financial goal that is important to you and put your savings to work for you.
  • It's important to have a purpose for your savings as it helps to keep you motivated to continue while also reducing the temptation to spend your savings. 

- Carol Glynn, founder of Conscious Finance Coaching

 

 

INFO

Everton 0

Arsenal 0

Man of the Match: Djibril Sidibe (Everton)

Things Heard & Seen

Directed by: Shari Springer Berman, Robert Pulcini

Starring: Amanda Seyfried, James Norton

2/5

BIGGEST CYBER SECURITY INCIDENTS IN RECENT TIMES

SolarWinds supply chain attack: Came to light in December 2020 but had taken root for several months, compromising major tech companies, governments and its entities

Microsoft Exchange server exploitation: March 2021; attackers used a vulnerability to steal emails

Kaseya attack: July 2021; ransomware hit perpetrated REvil, resulting in severe downtime for more than 1,000 companies

Log4j breach: December 2021; attackers exploited the Java-written code to inflitrate businesses and governments

End of free parking

- paid-for parking will be rolled across Abu Dhabi island on August 18

- drivers will have three working weeks leeway before fines are issued

- areas that are currently free to park - around Sheikh Zayed Bridge, Maqta Bridge, Mussaffah Bridge and the Corniche - will now require a ticket

- villa residents will need a permit to park outside their home. One vehicle is Dh800 and a second is Dh1,200. 

- The penalty for failing to pay for a ticket after 10 minutes will be Dh200

- Parking on a patch of sand will incur a fine of Dh300

Countdown to Zero exhibition will show how disease can be beaten

Countdown to Zero: Defeating Disease, an international multimedia exhibition created by the American Museum of National History in collaboration with The Carter Center, will open in Abu Dhabi a  month before Reaching the Last Mile.

Opening on October 15 and running until November 15, the free exhibition opens at The Galleria mall on Al Maryah Island, and has already been seen at the Jimmy Carter Presidential Library and Museum in Atlanta, the American Museum of Natural History in New York, and the London School of Hygiene and Tropical Medicine.

 

Real estate tokenisation project

Dubai launched the pilot phase of its real estate tokenisation project last month.

The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.

Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.

MATCH INFO

What: 2006 World Cup quarter-final
When: July 1
Where: Gelsenkirchen Stadium, Gelsenkirchen, Germany

Result:
England 0 Portugal 0
(Portugal win 3-1 on penalties)

THE BIO

Born: Mukalla, Yemen, 1979

Education: UAE University, Al Ain

Family: Married with two daughters: Asayel, 7, and Sara, 6

Favourite piece of music: Horse Dance by Naseer Shamma

Favourite book: Science and geology

Favourite place to travel to: Washington DC

Best advice you’ve ever been given: If you have a dream, you have to believe it, then you will see it.

The bio

Studied up to grade 12 in Vatanappally, a village in India’s southern Thrissur district

Was a middle distance state athletics champion in school

Enjoys driving to Fujairah and Ras Al Khaimah with family

His dream is to continue working as a social worker and help people

Has seven diaries in which he has jotted down notes about his work and money he earned

Keeps the diaries in his car to remember his journey in the Emirates

SPECS

Toyota land Cruiser 2020 5.7L VXR

Engine: 5.7-litre V8

Transmission: eight-speed automatic

Power: 362hp

Torque: 530Nm

Price: Dh329,000 (base model 4.0L EXR Dh215,900)

MATCH INFO

Newcastle 2-2 Manchester City
Burnley 0-2 Crystal Palace
Chelsea 0-1 West Ham
Liverpool 2-1 Brighton
Tottenham 3-2 Bournemouth
Southampton v Watford (late)

Contracted list

Ashton Agar, Alex Carey, Pat Cummins, Aaron Finch, Peter Handscomb, Josh Hazlewood, Travis Head, Usman Khawaja, Nathan Lyon, Glenn Maxwell, Shaun Marsh, Mitchell Marsh, Tim Paine, Matt Renshaw, Jhye Richardson, Kane Richardson, Billy Stanlake, Mitchell Starc, Marcus Stoinis, Andrew Tye.

The smuggler

Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple. 
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.

Khouli conviction

Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.

For sale

A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.

- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico

- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000

- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950

The specs: 2018 Peugeot 5008

Price, base / as tested: Dh99,900 / Dh134,900

Engine: 1.6-litre turbocharged four-cylinder

Transmission: Six-speed automatic

Power: 165hp @ 6,000rpm

Torque: 240Nm @ 1,400rpm

Fuel economy, combined: 5.8L / 100km

GROUPS

Group Gustavo Kuerten
Novak Djokovic (x1)
Alexander Zverev (x3)
Marin Cilic (x5)
John Isner (x8)

Group Lleyton Hewitt
Roger Federer (x2)
Kevin Anderson (x4)
Dominic Thiem (x6)
Kei Nishikori (x7)

Mountain%20Boy
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Zainab%20Shaheen%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%3C%2Fstrong%3E%20Naser%20Al%20Messabi%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3C%2Fstrong%3E%3A%203%2F5%3C%2Fp%3E%0A
The White Lotus: Season three

Creator: Mike White

Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell

Rating: 4.5/5