DUBAI, Aug 19 (Reuters) - Technical indicators and sluggish turnover indicate stock markets in the United Arab Emirates are likely to remain stuck in a sideways trend on Tuesday, while Egypt could face further declines following Monday’s sell-off.
Dubai rose 0.7 percent to 4,826 points on Monday; trading volume in August so far is the lowest of 2014.
“Yesterday’s bullish close hints at recovery towards the next resistance of 4,856 but only a close over this will send a run to the important barrier of 4,935,” Shiv Prakash, a senior technical analyst at NBADS Research, wrote in a note.
“We require a considerable increase in volumes to justify the breakout.”
Abu Dhabi also gained 0.7 percent on Monday, closing at 5,052 points. It has support at 4,975 and faces resistance at 5,080 points, said Prakash.
Egypt’s market may face further selling after making its largest decline in eight weeks on Monday, falling 1.4 percent to 9,316 points. The benchmark rose by nearly a fifth from late June to Sunday’s close and appears ripe for more profit-taking in the absence of much company news.
It has support at 9,200 points and faces resistance at 9,600, according to a note from NBK Capital.
Oman’s market could outperform; its index has lagged other Middle East benchmarks this year, rising 7.3 percent while Qatar, Dubai and Egypt have all gained more than 30 percent.
That underperformance could lead regional investors to rotate cash into Muscat’s equities when market activity improves after the summer, especially with Omani companies considered as paying relatively generous dividends. Oman’s trading volume was the highest in a week on Monday.
“Oman looks very attractive - banks’ loan growth has been strong, there are some big development projects underway and the country’s fiscal and current account surpluses are in good shape,” said Rohit Chawdhry, Gulf Baader Capital Markets head of asset management in Muscat.
“Valuations and dividend yields are appealing. The only major issue is when will industrial sector growth revive meaningfully. I expect that to happen in the third or fourth quarter.”
Data released on Monday showed year-on-year growth in Omani bank lending during June at its highest level since January 2013. (Reporting by Matt Smith; Editing by Andrew Torchia)