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01 October 2023

DFM and ADSM to remain in uncertain mode

By Mohamad Al Kady



Uncertainty and correction modes shadowed the trading on Dubai Financial Market and Abu Dhabi Securities Market throughout the week and forecasts showed this trend may continue in the next couple of weeks.


The investors are likely to adopt a wait-and-see approach until the middle of next month when the firms begin releasing indicators of the first quarter results.


However, the implementation of new regulations for account separation of investors by the Emirates Securities and Commodities Authority (ESCA) may have a negative impact on the trading volume next month.


Most brokerage firms are using pool accounts from customers to trade in the market and separation will limit their ability to use investor funds for trading.


The DFM index tried several times last week to break the psychologically important 6,000 level, especially during the last two sessions, but it failed. However, leading stocks played a major role in stabilising the market, especially Dubai Islamic Bank stock.


DFM ended Thursday's session slightly up at 5,960, gaining 28.5 points. The index witnessed seesaw trading the whole day. It dropped below 5,890 points in the morning trade but recovered most of the losses in the last hour to end the day higher. Stocks of 27 companies were traded with 12 stocks advancing, eight declining and seven remaining unchanged. Speculators and long-term investors focused on specific stocks, especially DFM and DIB stocks.


ADSM ended Thursday's session at 4.815 points, declining by around 15 points, or 0.3 per cent. Stocks of 43 companies were traded with 17 advanced, 25 declined and one ended unchanged.


Hosam Al Huseini, financial analyst at Emaar Securities, said both UAE stock markets are affected by seasonal trends. “We are facing the end of a trading cycle in the market.

There is a strong correction mode and there are no strong factors that can lead movements and trading.  There will be marginal movements until mid-March or the beginning of April. Leading stocks could play a major role in stabilising the markets as we see DFM and Emaar stocks with considerable good prices. In ADSM, etisalat stock is trying to regain its leading role.”


Huseini hoped the DFM could break the resistance level of 6,000 points to start a new upward trend, while ADSM should break the 4,850 points.


“But technical indicators show the cycle of trading did not reach its ultimate and this situation will continue for the next week. There is a slowdown in trading volume and we need large volumes for two or three sessions to start the upward trend.”


Ahmed Abdel Rahman, head of research at Amana Capital, said both markets showed a side-way trend that may lead to a slight downturn trend next week due to the decline in trading volume. “It is important to see daily average trading value reaching Dh4.7 billion.”