Slight profit-taking pushed most regional markets lower Thursday as investors failed to find a positive catalyst to advance prices that seem stretched.
Markets in the United Arab Emirates slipped from multiyear highs but selling pressure was muted, giving hope of further upside in coming sessions.
“First-quarter expectations will channel into the market and dividends should entice people and help stocks [rise] further in the short term,” said Marwan Shurrab, vice president and chief trader at Gulfmena Investments.
Other analysts said the market’s early-year gains have been sharp, with many stocks at or above fair value, and fresh positive catalysts are required to justify a further hike.
The UAE’s markets have surged this year as traders bet on improved corporate earnings. Fourth-quarter results have been broadly positive, although profits at Dubai bellwether Emaar Properties and Abu Dhabi’s Aldar Properties– among the UAE capital’s most liquid stocks – missed analysts’ estimates.
New development projects have helped sustain a positive sentiment on UAE equities.
Dubai Wednesday gave the go-ahead for a new $1.6 billion man-made island as it resumes constructing extravagant developments, despite the emirate being littered with stalled or abandoned projects commissioned in the boom years of the previous decade.
Dubai’s large-cap stocks headed declines. Emirates NBD and Emaar dipped 3.4 and 1 percent respectively.
The emirate’s benchmark slipped 0.5 percent, easing away from Wednesday’s 38-month high. It rose 1.9 percent for the week. Some investors tend to sell ahead of the weekend to reduce their risk exposure.
Abu Dhabi’s benchmark dipped 0.7 percent, also down from a 38-month high. First Gulf Bank was the main drag, slipping 2.7 percent.
Elsewhere, Qatar’s index lost 0.4 percent, snapping a rally which helped it hit a 10-month high in the last session.
Industries Qatar shed 2.5 percent and Commercial Bank of Qatar eased 0.7 percent.
In Egypt, the market extended declines. The index slipped 0.3 percent to close at 5,716 points, trimming 2013 gains to 4.6 percent. The market has been moving within a tight range as the government struggles to stabilize the economy and manage widespread protests.
Since Jan. 9 it has been trading within a range of 400 points, which is unusual for Egypt’s volatile market.