Dubai’s index see-saws in early trade as buyers target property-related stocks, while Abu Dhabi is near flat.
Dubai’s benchmark is down 0.3 per cent at 4,843 points. It was up as much as 1.4 per cent in early trade, but swiftly gave back those gains as selling resumed.
The measure fell 5.5 per cent on Monday, its fourth straight decline in what some analysts saw as the likely start of a more sustained correction.
“It will soon be the summer holidays for most people and a lot have made enough money and will keep out of the market until August or September,” says Sanyalaksna Manibhandu, manager of research at NBAD Securities.
Ahead of Tuesday’s session, he predicted there could be renewed buying from investors who had been waiting to enter at lower prices, which may also persuade other traders to remain active, but otherwise Dubai is likely to remain in the doldrums for at least a few weeks.
Most money is aimed at property-related stocks, which are a favourite target for speculative trade.
Builder Arabtec falls 1.2 per cent, Emaar Properties slips 0.1 per cent and Union Properties drops 0.5 per cent.
This trio, which were all up more than one per cent initially, are trading at trailing price-to-earnings ratios of 58, 25 and 4.8 respectively, according to Reuters data.
“Low to mid-teen P/E ratios don’t look too high if the economy is growing at four per cent a year,” says Tom Stevenson, investment director – personal investing at Fidelity Worldwide Investment.
“Valuations overall, if you look at the ratings and multiples we’re trading at, don’t feel like we’re going into dangerous territory. It’s not to say that we won’t get there in time but, right now things are going on like Expo 2020, which support prices.”
Last November, Dubai was chosen to host the trade exhibition Expo 2020, a decision that sparked a rise in property sale and rental prices.
Abu Dhabi is down 0.1 per cent at 4,865 points, while Kuwait and Oman are up slightly.