Abu Dhabi shares rose ahead of Etisalat opening up to foreign investors, but the Dubai measure dropped as concerns over slowing global economic growth and a possible increase in US interest rates this week weighed on investor sentiment.
The Abu Dhabi Securities Market General Index increased 0.32 per cent, led by gains in Etisalat the country’s biggest telecoms company.
Foreign investors will be able to buy the stock from Tuesday.
The Dubai Financial Market General Index slid 1.5 per cent, led by a decline in shares of Emaar Properties. A lifting of US interest rates after more than five years of easy monetary policy may accelerate the sell-off in riskier assets such as emerging market stocks. Meanwhile, the economic slowdown in China may extend to developed markets, analysts say.
“Etisalat opening up to foreign investors has definitely attracted more interest,” said Sachin Mohindra, a portfolio manager at the Abu Dhabi-based asset manager Invest AD.
“Whether it is new money or old money being churned, it will be interesting to watch. If it is incremental new money, it will be positive for the market. But overall, it has improved sentiment. And in the future, in November, all the index providers will possibly include it in their benchmark rebalancing. So we are likely to see passive inflows.”
Mr Mohindra estimated that there may be $500 million of indexed investment into Etisalat following any rebalancing by major index providers such as MSCI.
Etisalat, which has the second-biggest weighting on Abu Dhabi’s benchmark index, has been gaining after the company’s board of directors this month approved a plan to allow non-Emirati investors to own shares in the company. The stock closed 1.4 per cent higher to Dh14.75 a share on Sunday.
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