Bored Stock Traders in Dubai Cause Dwindling Market Volumes

(Bloomberg) -- Dubai's stock market has lost its fascination for equity investors -- and there are no clear signs it's about to win back their attention anytime soon.

The value of stocks traded on the emirate's main exchange fell to the lowest in almost five months on Thursday, data from the Dubai Financial Market compiled by Bloomberg show. The number of shares traded in the benchmark index was below its 30-day average in each session in February. The gauge itself has dropped to the lowest since November 2016.

What is keeping investors away? The completion of earnings and dividend announcements, plus a lack of compelling reasons on the horizon to trade, according to Ali Adou, head of asset management at Daman Investments in Dubai.

“Appetite from both local and foreign investors has dwindled,” he said. “There were some expectations before the earnings season and the announcement of dividends, but that's now over. The markets are lacking catalysts.”

Stocks in Dubai are dominated by two sectors: real estate and banking, and neither can claim alluring prospects for this year, Adou said. Emaar Properties PJSC, the developer that's the weightiest stock in the DFM General Index, has retreated 11 percent in 2018 to close to the lowest in almost two years.

Even appealing valuations aren't enough to attract investors. The DFMGI trades at 8.1 times 12-month expected earnings, compared with 12.3 times for the MSCI Emerging Markets Index, almost the deepest discount since 2011. The Dubai index is the worst performer among major gauges in the Middle East this year, dropping 4.8 percent.

“Valuations look very attractive for many names versus historical averages and emerging markets,” Adou said. “But it is hard to expect a rebound for stocks in Dubai any time soon.”

To contact the reporter on this story: Filipe Pacheco in Dubai at fpacheco4@bloomberg.net.

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, John Viljoen, Brian Lysaght

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