DFM edges higher despite low turnover

The Dubai Financial Market (DFM) bounced up yesterday at low turnover giving indications of continuing hesitation among investors with a general downside trend still in play.

The DFM index added 12.34 points, or 0.72 per cent, to close at 1736.61 points yesterday.

The market opened in the positive area and remained up throughout the session with relatively low volatility and limited movements in leading active stocks.

The index advanced to 1745 points in intraday trading but could not test its resistance at 1750 points and lost some of its gains by the end of the session. Arabtec was the main player in the market yesterday, taking the lead from Emaar, and led the uptrend amid good buying interest in the stock, mainly from speculators.

Arabtec closed up two per cent at Dh2.49 after it rallied to Dh2.53 during intraday trading. Despite these speculations on Arabtec, other leading stocks remained calm and moved up in a very narrow range.

The turnover remained low, with 136.5 million shares worth Dh253.9 million changing hands during the session. Arabtec dominated about 46 per cent of the total trade value.

All other active stocks advanced during the session, including Emaar, DFM, UPP and Tabreed. However, they moved in a narrow range at low turnover. "Sentiment is still weak in the DFM despite some positive reports. The index was not able to test its short-term resistance level at 1750 points yesterday," said Ehab Rashad, Trading Manager of Direct Broker for Financial Services.

"Turnover also remained at low levels, with leading investors, including institutions and foreign investors, remaining outside the market. There were some speculators but the movements were very quick, as daily traders were buying and selling in the range of around two fils."

Rashad predicted that the DFM index would continue to move in a narrow range during the next few sessions due to a lack of strong movers in the market.

"The DFM is expected to move in the range of 1720-1800 points in the near future until there are strong movers or news that may change the trend. The market is expected to test the 1750-point level today and any good movers or surprises in Q1 results may push the index higher."

Shuaa Capital retreated 0.7 per cent yesterday to close at Dh1.40 after it advanced to Dh1.44 during intraday trading. The stock saw limited movements during the session despite the company announcing that it had returned to profitability after reporting total revenues of Dh60.9m and a net profit of Dh19.5m for the first quarter of 2010, compared with a loss of Dh202m in the same period last year.

The investment company also announced that its board of directors had ratified a Dh240m loan facility with Abu Dhabi Commercial Bank. The loan includes a settlement of Shuaa's obligations against guarantee of the Dh200m loan availed by Gulfinvest, which was part of Shuaa's provisions in 2009.

Arabtec up on JV rumours

Arabtec dominated the DFM yesterday amid high rumours among speculators about a possible joints venture with Abu Dhabi-based Aabar Investment.

Increasing interest in Arabtec stock was seen since the second half of Sunday's session when Arabtec said its board of directors would meet on May 9 to discuss a wide agenda, including the increase in the capital of Target Engineering Construction Company, an Arabtec subsidiary based in Abu Dhabi.

Following the announcement, rumours spread in the DFM that the move might be a first step to create a joint venture with Aabar Investments after the two firms decided to cancel the acquisition plan last month.

UP rises

Union Properties rallied for the second session yesterday, adding 6.13 per cent to close at Dh0.485 after the firm said its first quarter profits rose 67 per cent to Dh50 million compared with Dh30m in Q1 2009.

The rally in its stock started on Sunday after the firm's extraordinary general meeting approved the extension of a bridge facility worth Dh405m from Emirates NBD, due in December 2009, until March 2014.

ADX-DFM merger

The DFM Company declined to confirm or deny reports about merger talks between the Dubai Financial Market and the Abu Dhabi Securities Exchange (ADX).

"The idea of a merger between the two bourses is under discussion between representatives of Abu Dhabi and Dubai governments for a long time. As long as we are not a direct party in these discussions and we do not have clear information about the direction of the talks, we cannot deny or confirm the issue," the DFM said in a statement.

The ADX also issued a similar statement stressing that the management of the bourse does not have any information related to the merger discussions.