UAE equity markets, both Dubai and Abu Dhabi, remained resilient to the fall in the oil price in H1 2016. The Dubai General Index and Abu Dhabi General Index registered year-to-date returns of 6.5 percent and 1.9 percent respectively.

The better performance of telecom, banking and real estate stocks in UAE markets have been the major boosting factor to the country’s indices.

Consolidation of the banking industry with the merger of two major banks, National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB) and speculation of more consolidation in the banking industry has led to a buying splurge in the markets.

Apart from banks, the financial services, telecommunications, and construction sectors registered increases in earnings of 6.5 percent, 16.4 percent, and 32.4 percent respectively in H1 2016 (YoY).

The UAE has also been implementing policy changes, such as the reduction of fuel subsidies to rationalise government expenditure and the implementation of taxes to boost the government’s revenue.

Further cuts to water and energy subsidies are expected, as well as the introduction of Value Added Tax (VAT) in 2018. To bridge its budget gap, the UAE has resorted to bond issuances in 2015 and 2016.

Overall, the UAE’s concerted efforts towards economic diversification, Dubai’s image as the financial hub and business-friendly environment in the region and possible consolidation in the banking sector have all bolstered investor confidence.

TOP 10 COMPANIES IN THE UAE

(By market capitalisation as of October 9, 2016. Source: Reuters Eikon, Markaz Research)

1. Emirates Telecommunications Group Co (Etisalat)

Market capitalisation: $47.24bn
Sector: Telecommunications Services

2. First Gulf Bank 

Market capitalisation: $13.85bn
Sector: Banking & Investment Services

3. Emaar Properties

Market capitalisation: $13.45bn
Sector: Real Estate

4. National Bank of Abu Dhabi

Market capitalisation: $12.34bn
Sector: Banking & Investment Services

5. Emirates NBD 

Market capitalisation: $12.26bn
Sector: Banking & Investment Services

6. Abu Dhabi Commercial Bank 

Market capitalisation: $9.72bn
Sector: Banking & Investment Services

7. Emaar Malls Group 

Market capitalisation: $9.21bn
Sector: Retail

8. Emirates Integrated Telecommunications Company (du)

Market capitalisation: $7.84bn
Sector: Telecommunications Services

9. Dubai Islamic Bank 

Market capitalisation: $6.93bn
Sector: Banking & Investment Services

10. Aldar Properties

Market capitalisation: $5.61bn
Sector: Real Estate

Article Source: Gulf Business