DFM could cross 2008-09 high of 6,000 points: Analyst

The Dubai Financial Market could breach the 2008-09 level of 6,000 despite some volatility because most of the international markets have risen above their 2008 highs, an analyst said.

Shakeel Sarwar, head of asset management at Securities & Investment Co (Sico) in Bahrain, said he expected more volatility in the future, although the index, now at 5,088 points, was likely to rise further and aim for 2008-2009 levels above 6,000 points.

"Almost all international markets have breached their 2008 highs while most of the regional markets are still on average 25 per cent below their 2008 highs. Hence the positive momentum in the regional markets may continue," he said.

On Thursday, stock markets in the United Arab Emirates retreated from multi-year peaks.

The Dubai market has risen some 50 per cent this year, making it the world's best-performing stock market, and many fund managers think a downward correction is due sometime in coming months. Thursday's volatility could be a signal of that, but so far, bullish retail investors have always come in to buy on dips. So it is not clear if any sustained pull-back is starting.

Dubai's main index slid 0.9 per cent in a volatile session during which was down as much as 4.0 per cent. Emaar Properties was the main drag after its annual meeting on Wednesday dashed some investors' hopes for a 2013 dividend hike beyond the board's proposal; the stock fell 1.4 per cent.

Other property and construction stocks also fell, with the exception of builder Arabtec Holding, whose shares were extremely volatile but closed up 0.3 per cent.

Shakeel Sarwar said: "I think in the case of Dubai the market has risen very sharply without any significant correction and the correction was due. It was amplified by the fact that most investors are retail and leveraged."

Arabtec soared 10.7 per cent on Wednesday after the company outlined ambitious expansion hopes and presented new projects at a major real estate exhibition in Abu Dhabi. But analysts said the stock's dynamics had become unpredictable and it had surpassed some major brokers' fair value estimates.

Apart from Arabtec, the only major stocks to rise on Thursday were lender Emirates NBD and bourse operator Dubai Financial Market, up 1.0 and 0.5 per cent respectively after both companies reported strong first-quarter earnings.

Emirates NBD, Dubai's largest bank, said on Thursday that first-quarter net profit rose 25 per cent to 1.04 billion dirhams ($284 million), while analysts had expected 904 million dirhams on average.

DFM also beat expectations as quarterly net profit surged eightfold to Dh215.1 million. Analysts at HSBC and Global Research had expected Dh202 million and Dh109 million.

In Abu Dhabi, developer Aldar Properties, down 6.1 per cent, was the main drag on the UAE capital's index which slipped 0.8 per cent.

Shares in First Gulf Bank rose 1.1 per cent after it posted a 27 per cent rise in first-quarter profit to 1.33 billion dirhams, exceeding an average analyst forecast of 1.23 billion dirhams.

SAUDI, BAHRAIN

Saudi Arabia's bourse ended a three-day strak of declines and edged up 0.1 per cent. Food producer Almarai was the main support, rising 4.7 per cent to 67.50 riyals after NBK capital raised its fair value estimate for the stock by 5 per cent to 78 riyals.

Shares in Kingdom Holding, the investment firm owned by billionaire Prince Alwaleed bin Talal, which this week reported a 14.8 per cent increase in first-quarter net profit, jumped 8 per cent.

Bahrain's bourse hit a three-year high of 1,419 points, gaining 1.4 per cent on the back of Arab Banking Corp(ABC), which jumped its daily limit of 10 per cent.

Sarwar from SICO Bahrain said relatively cheap valuations of Bahraini companies were attracting bargain-hunters who were not afraid of low liquidity in the local market.

"ABC is the cheapest banking stock in the region at 0.5 book value," he said.

"It seems that after a long time, there is some genuine buying interest from investors, both local and regional, and I think that will continue. All you do (as a trade-off) is compromise on liquidity."

THURSDAY'S HIGHLIGHTS

DUBAI: The index slid 0.9 per cent to 5,088 points.

ABU DHABI: The index edged down 0.8 per cent to 5,171 points.

QATAR: The index slipped 0.05 per cent to 12,955 points.

SAUDI ARABIA: The index edged up 0.1 per cent to 9,557 points.

KUWAIT: The index slid 0.07 per cent to 7,448 points.

BAHRAIN: The index climbed 1.4 per cent to 1,419 points.

OMAN: The index slipped 0.1 per cent to 6,773 points.

 

Follow Emirates 24|7 on Google News.