DFM returns to winning ways amid upturn in Gulf |
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The Dubai bourse returned to winning ways amid a Gulf-wide upturn on equity markets, despite its lowest turnover of 2008.
Lacklustre trading could not stop the Dubai Financial Market from rising 0.98 per cent to 2,053 points following a late rally in Emaar Properties.
The developer opened five per cent higher at Dh3.12, but then saw these gains wiped out before a second surge helped it finish on Dh3.06, up 3.03 per cent.
The other blue chips also advanced, with DFM Company and Dubai Islamic Bank climbing 3.2 and 1.2 per cent respectively, while du added 2.15 per cent.
Deyaar Development, Gulf Navigation and Air Arabia were also among the gainers.
"There are a lot of question marks over the market," said Ayman El Saheb, Darahem Financial Brokerage director of operations.
"Yesterday, people were hesitant to buy, while there were few willing to sell at such low prices, which helped to stablilise the market. It was flat, with not many major gainers or losers."
The index fluctuated within a 2.3 per cent range and hit an intraday high of 2,074 points just before the mid-session mark.
Yesterday's turnover was Dh284 million, which is the worst of 2008 and down by three quarters on the day before.
"Investors have lost a great deal of money, especially those who were leveraged, and so the investment pool is shrinking," said Saheb.
"People are cutting their losses and getting out of the market and many of them won't be back, while others will not reinvest until it's clear we are back on the right track.
"But capital markets will always attract new money and new investors, so it's not a one-way process."
Emaar was most active in cash terms, with Dh94m of shares changing hands, while second-best Islamic Arab Insurance claimed a paltry Dh27m.
The latter was Dubai's star stock after jumping 13.97 per cent to Dh1.06, which takes its gains to 39 per cent in just three sessions. Yesterday, IAIC saw 3.1 million shares - an eighth of its total trading - bought by company employees in multiple, simultaneous transactions completed at 11.10am.
Gainers edged losers 13:8, with Shuaa Capital the most prominent member of the latter group after falling four per cent to a new two year low of Dh1.92.
Dubai Islamic Insurance was another to struggle, slipping 3.59 per cent, while Ajman Bank dropped 3.36 per cent to Dh1.15 and Union Properties lost 3.4 per cent.
Arabtec rallied, however, climbing 7.93 per cent to Dh3.40. The construction firm is the former darling of the Dubai bourse, after more than tripling in price in the 12 months to July 24 when it claimed an all-time high of Dh19.65. Since then, it has lost 83 per cent of its value, despite continually adding to its already impressive order book and most analysts believe Dubai's real estate-related stocks are likely to lag in any rebound.
The need to instill confidence
UAE institutions from the government to the regulators, stock exchanges, banks and brokers must work together to restore investor belief, according to Ayman El Saheb, Darahem Financial Brokerage director of operations.
"I think we are very close to the bottom of the market, although we need to instill confidence, not just in the health of the local stock markets, but the wider economy as well," he said. "People are still losing jobs, especially in real estate, and banks remain very restrictive in terms of financing potential homeowners, while there needs to be more transparency over the number of loan and property defaults.
"So it will take time to restore confidence and there's no quick fix. Confidence, transparency and liquidity are what's required."
Local perspective
The UAE markets seem to have broken the correlation to their international counterparts, with investors more preoccupied with the local economy than the wider global picture, but this has not made predicting the exchanges' next moves any easier.
"One can't confidently offer a one-day forecast, let alone how the markets will fare for the rest of November," said Ayman El Saheb, Darahem Financial Brokerage director of operations. "Based on yesterday's late buying, we could see some good gains in Dubai today, but this isn't a key indicator and so it could just as easily plunge on heavy profit taking."
Saheb stressed the difficulty of assessing the Dubai bourse from a technical point of view, although he said the majority of technical analysts are forecasting a further 15 to 20 per cent fall.
"While I don't want to sound too optimistic I doubt it will be that bad," said Saheb.
"In saying that though, Dubai has already lost close to 70 per cent, so why not 85 per cent?"
By Matt Smith
© Emirates Business 24/7 2008
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