Abu Dhabi: The National Investor, UAE Equity Index has registered an increase of 103% as of January 11, 2005, climbing to 695.64 points from 342.60 points fifty two weeks (or a year) earlier.
Market capitalization rose by 98%, from AED179.4 billion in 2003 to AED355.20 billion at end of 2004, while value of shares traded rose a staggering 795%, from AED7.5 billion to AED 67.1 billion.
Commenting on the performance, Dr. Karim El Solh, Chief Executive Officer, The National Investor, said: “2004 witnessed the best index performance in six years and it should be described as a golden year. Many factors have contributed to the positive outcome. These include the rise in oil prices, strong mid-year corporate results, strong expectations for 2005-corporate returns almost across the board and investors’ enthusiasm for new issues.” Dr. Karim expanded on the oil price hike and pointed out that with oil prices reaching as high as US$ 55.8 per barrel, high liquidity generated a surplus in the budgets of all six GCC budgets. “For every additional US Dollar on the price of oil barrel, the income of GCC states increases by about $5 billion.”
Sounding a warning note for 2005, he continued “It is high time to go back to the fundamentals. As market PEs cross the 20x limit, many stocks are reaching fair valuations and some of them tend to be slightly over-valued. In this environment, investors should become more selective and consider reshuffling their portfolios, booking profits made on speculative stocks, and refocusing their portfolio holdings on fundamentally sound firms.
“As economic growth is expected to continue in the foreseen future, there is still room for growth, but investors should focus on well managed firms with a proven and recurrent record of earnings growth,” Dr. Karim concluded.
About The National Investor: The National Investor is a leading UAE investment and merchant banking firm with a distinguished track record in investment banking, private equity and asset management. The Company is backed by over 65 UAE shareholders who come from the highest echelons of the business and political community. The Company is currently ranked as the leading arranger of public share offerings, having lead managed the largest number of public offerings in the UAE to date (with total transaction value exceeding 4.1 billion AED). NI is also actively involved in the local asset management scene, with the launch of the first Emirates Real Estate Fund. For more information on the National Investor, please visit the Web site at http://www.nationalinvestor.ae