Investment Review №330. Profit favors the bold

DFM General Index: 1-Year Dynamics

 

Abu Dhabi Securities Exchange Index: 1-Year Dynamics

Yield, Forward Rate 1m10y, UAE, 1-Year Dynamics

Brent Oil, 1-Year Dynamics

From September 22 to October 6, 2025, the UAE stock markets experienced moderate declines across the board, averaging a loss of 1.4%. The Dubai Financial Market (DFM) index decreased by 2.0%, and the Abu Dhabi Securities Exchange (ADX) dropped by 0.7%. The price of Brent crude oil lowered by 2.1% for this period. This trend indicates some profit-taking by investors due to global economic uncertainties. In contrast, the S&P 500 index gained 0.7% over the same time frame.

The performance by sector was mainly negative. The only exceptions were the industrial goods sector, which grew by 2.4%, and the energy sector, that increased by 1.77%. Conversely, the real estate sector recorded the most significant decline, losing 2.15%. Among large companies, shares of Americana Restaurants (AMR: +5.82%) and Multiply Group (MULTIPLY: +5.15%) experienced growth. Meanwhile, stocks of Abu Dhabi Islamic Bank (ADCB: -9.11%) and Emaar Development (EMAARDEV: -6.35%) decreased. Reuters attributes this negative trend to profit-taking by foreign investors, amid news about possible changes in regulations on foreign ownership in the GCC region, despite robust real estate sales figures in the UAE.

UAE Treasury bond yields decreased by 27 basis points, whereas U.S. Treasury yields rose by 2 basis points. Over a month, UAE bond yields have shown a decline, with the spread over comparable U.S. Treasury issues currently standing at 107 basis points, while the median spread for the past five years has been 47 basis points. The revision of credit risks in the region is supported by an improved economic forecast for the UAE and expectations for a more accommodating monetary policy.

Economic Updates

• In September, the UAE’s non-commodity economy experienced its most robust growth in seven months, fueled by a rise in new orders and sustainable business activity expansion. The S&P Global PMI climbed to 54.2 points, up from 53.3 in August, signaling a solid improvement in business conditions.
• Adhering to the commitment to bolstering international economic relations, an Abu Dhabi delegation headed by the Department of Economic Development (ADDED) secured several agreements with U.S. firms in the finance and advanced technology areas.

Corporate News

• PureHealth Holding (PUREHEALTH) has successfully completed the €800 million acquisition of a 60% stake in Hellenic Healthcare Group (HHG), a leading private healthcare provider in Greece and Cyprus.
• First Abu Dhabi Bank (FAB: -3.62%) has announced the formal merger of its payment solutions subsidiary, Magnati, with Network International.
• ADNOC has submitted a bid package to the European Commission seeking approval for its $14 billion acquisition of the German chemical company Covestro. This move comes in response to an in-depth investigation by the EU into potential foreign subsidies.

Two-Week Outlook

The negative effect of the potential increase in U.S. import duties on international trade and the rise in oil production quotas by OPEC+ countries may exert pressure on oil prices and the energy sector. The OPEC+ countries have raised production quotas by 137,000 barrels per day (bpd) for November, and the actual increase in oil output will be of great importance. Recent weekly statistics from the U.S. have been unfavorable for oil prices: production remains high at 13.5 million barrels per day, and total hydrocarbon reserves have increased. Nonetheless, robust seasonal demand and persistent geopolitical risks, such as potential strikes on oil & gas infrastructure, may lend support to oil prices. No major Q3 financial results are anticipated for release in the next two weeks, but trading of ALEX Holdings (ALEX) shares is set to commence on October 15. From a technical analysis standpoint, both the ADX and DFM indices are trading above their 200-day moving averages. However, in terms of the 50-day moving average, only the ADX appears attractive, as it has transitioned into a short-term bullish trend. The market will likely require a strong fundamental catalyst to return to the levels seen in July.