Cantor Fitzgerald recommended buying shares in UAE banks despite the regional conflict threatening the Gulf state, describing these shares as low-risk, high-return investments.
Analyst Kato Mukuro recommended increasing the relative weight of seven banks' stocks in investment portfolios, based on the UAE's commitment to consolidating its position as a safe haven, along with the strength of its economy and the low cost of equity.
Mokoro wrote in a research note to clients: “We recognize that an escalation of regional conflict entails significant risks and volatility for local markets in the near term, but the underlying investment view or idea for the stocks we research is based on fundamental factors that support long-term investment.”
Opportunities in UAE bank stocks
His preferred stocks include National Bank of Ras Al Khaimah, First Abu Dhabi Bank, and Abu Dhabi Islamic Bank. His target price for National Bank of Ras Al Khaimah is AED 18.40, roughly double the estimate of any other brokerage firm tracked by Bloomberg, suggesting an upside potential of over 80%.
Cantor Fitzgerald offered this optimistic outlook as major UAE markets prepared to resume trading on Wednesday after a two-day closure amid the Iranian crisis. The conflict threatens the image of stability the UAE has carefully cultivated in a turbulent region, with risks impacting tourist arrivals and foreign investment.
Mokoro said he expects the market to perform poorly at the reopening, but that this could present attractive opportunities for investors focused on the long-term fundamentals of company stocks.
The analyst added in separate written comments to Bloomberg: UAE banks are very resilient and can withstand short-term pressures.
