Dubai: UAE stocks may rally in the second half of the year after a slow six months to June, as government comes out with new tenders for the Expo 2020, chief executive of Menacorp, a top brokerage in the UAE told Gulf News.

The Dubai Expo 2020 is expected to spur investments of up to Dh70 billion, analysts say, aiding investor sentiment, which has been subdued so far in the year.

“We are not expecting rally in markets at least for the first quarter of 2015. Things have obviously slowed down. We have seen that in terms of daily trading value. However, in the second half of the year, we see the government announcing tenders for Expo 2020 for different projects and the market would positively react at these announcements,” Fathi Bin Grira, chief executive officer at Menacorp told Gulf News.

“We still believe that fundamentals are solid and so far we haven’t seen falling oil prices transmitted into the real economy or the expectations for Dubai Expo 2020,” said Grira.

The Dubai index which gained more than 40 per cent till November, gave up all its gains at one point only to end the year 11 per cent higher. The index registered a peak of 5193.03 on September 4.

However, the rally would be stifled by volatile crude, and won’t be enough to retest old peaks.

“The main driver for 2015 would be oil. Everything will depend on the situation of oil and it will impact the banks and the real estate economy. I don’t think this trigger would be enough to reach back the highs witnessed last year,” said Grira.

Crude shed more than 50 per cent last year on worries of a supply glut.

Delayed IPO’s

The delayed rally could also potentially postpone the IPOs of companies, which prepared primary offering plans due to the rally witnessed last year.

About 5-6 companies including Emaar Malls Group and Dubai Parks and Resorts got listed on the DFM riding high on robust investor sentiment and liquidity last year.

“Many of the companies are ready to go public. Several projects are currently postponed due to market conditions, so they have to push the button to go public. So what we have to identify is to ascertain the right time frame and the right window of opportunity. In the second half of the year, so by the third or the fourth quarter we would see more IPO’s,” said Grira.

Big picture

“The big picture is that Dubai is not reliant on oil, so due to a drop in oil prices we would be good performance in the world economies and Dubai would benefit from it as a hub. I don’t think the infrastructure projects would get impacted. Even though we have a high co-relation with oil price, investors will still rely on price to choose GCC and the UAE for their investment destinations for markets,” said Grira.

Menacorp would witness low volumes in 2015, as investors prefer to sit on cash in volatile markets.

“We have low volumes as of now, but clients have kept their cash in their account and they are holding stocks so there is no activity. If we have low volumes, but at the same time investors ask for their cash to invest in real estate, etc then that would be scary. They are just observing the situation of wait and see,” he said.

Menacorp was ranked first in terms of value for a second year in a row with a volume of Dh100 billion, however the brokerage doesn’t expect the same performance to continue this year.

“We are expecting 60 per cent of this figure this year due to different market sentiments. If people don’t feel confident about markets then they don’t feel confident. Unless if we have some positive news from crude oil, we might have a slower market. It’s a wait-and-see attitude,” said Grira.