DFM sees low turnover over global worries

Further selling pressures on leading active stocks dragged the Dubai Financial Market (DFM) index below its psychological critical level of 1500 points yesterday amid a general downtrend in global and regional markets.

Concerns about global economic growth as well as worries about the second-quarter results intensified yesterday, with significant downside movements in Asian stocks and negative openings in European markets, which hit local sentiment. The DFM index lost 33.57 points, or 2.22 per cent, to close at 1481.82 points.

The negative sentiment from global markets fuelled selling pressures on the DFM yesterday as the market was moving the downside throughout the session. Some buying interest was seen in leading active stocks, especially Emaar, from low levels but buying was weak and could not reverse the bearish trend in the market.

"The negative sentiment increased in global markets after the Group of 20 meeting as world leaders gave very confusing statements about the fragile recovery in the world economy," said Ahmed Tabbo, Financial Analyst at Darahem Brokerage. "Also, world leaders talked about partial controls over budget deficit to maintain the current weak economic growth. These statements hit the market sentiment around the world and leading markets in Asian and Europe were sharply down yesterday. This sentiment affected trading on the DFM as the market lacks domestic movers and tracks the trend in global stocks."

Emaar and Arabtec were the leading active stocks yesterday and they dominated more than 50 per cent of the turnover. Both stocks witnessed selling pressures. Emaar lost 3.13 per cent to close at Dh3.10 while Arabtec retreated 2.75 per cent to Dh1.77.

"The DFM is still in the downside channel and some stocks are hitting new lows. This is very worrying as the market is responding negatively to any downside movements in global markets while any bounces depend on local news. There are no expectations of major movements in the near future as the second quarter results are expected to have limited impact on the trend," Tabbo said.

He predicted that the DFM would continue to move in the range of 1430-1540 points during the coming few weeks amid the lack of strong movers that may change the trend. "The market is heading to its previous historical low of 1430 points and this trend is very negative. We need strong local movers to change the sentiment. Even the turnover is very low and giving mixed messages to the market."

The turnover remained at low levels with deep concentration on Emaar and Arabtec with 265.4 million shares worth Dh245.2 million changed hands. Air Arabia was the only stock among the top active players that advanced yesterday while the rest ended in the negative area.

Heavyweight in the banking sector added to the negative movement in the DFM after they suffered strong losses at low turnover. Emirates NBD dropped 3.85 per cent to Dh2.50 while DIB retreated 2 per cent to Dh1.97.

The sentiment in the UAE and other GCC markets also turned negative on slipping oil prices in international markets.

"The negative sentiment about the global economic growth is affecting prices stocks and commodities as well. There should be signs of a strong recovery to attract more investments in the markets but the current situation is very negative so investors prefer to remain outside the markets to protect their wealth against any possible downside pressures," Tabbo said.

Deyaar faces selling pressure

Deyaar Development faced strong selling pressures and was trading near its lows yesterday after the firm said its board had decided to hand back the management of the Skycourts project in Dubai Land to the National Bonds. Deyaar fell 6.67 per cent to Dh0.308 and hit the level of Dh0.300 during intraday trading on negative sentiment regarding revenues of the firm and expectations of the Q2 results were very weak.

Foreign institutions shift positions

Foreign institutional investors were shifting their positions on the DFM yesterday especially between Emaar and Arabtec without a clear reason behind these movements, according to sources in the market.

"Foreign institutions continued accumulations on Emaar stock for the second session yesterday. However, they created strong selling pressures on Arabtec. There is no clear reason but rumours are increasing about cash flow to Arabtec, which may affect its operations. Also, there are expectations that the market may face some downside movements in the next few sessions and then a strong bounce which may achieve some good gains for short-term traders," a source said.

According to the DFM data, foreign investors (non-UAE nationals) bought shares worth Dh119.76 million and sold shares worth Dh95.34m which means that foreign investors were net buyers of shares worth Dh24.42m.  

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