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26 February 2024

Low volumes to haunt bourses this week

By Parag Deulgaonkar


The UAE markets are likely to move sideways with expected low volume turnover when they open today for business after the Eid holidays, say analysts.

“Individuals are likely to book profits over the week, as 2007 comes to an end. However, institutions and high net worth individuals will enter the market, taking note of the season beginning January,” P Krishnamurthy, CEO, Al Rostamani Group’s financial services division, told Emirates Business.

On Monday, the Dubai Financial Market (DFM) closed 0.13 per cent lower at 5,737 points, with a trade volume of 372 million shares.

The market is expected to trade range bound, said Krishnamurthy, with five per cent movement on either side. “We are going to see more day traders entering the markets,” he added.

A day trader is a stock trader who holds positions for a very short time (from minutes to hours) and makes numerous trades each day.

Shares of Emaar Properties, Deyaar, Amlak and Tamweel are expected to dominate the DFM.

After Emirates Business reported Amlak Finance plans to renew its application for an Islamic banking, the scrip has seen an upward march.“We are renewing our application to convert into an Islamic bank after this year’s closing,” Chairman Nasser Al Shaikh said.

Sanyalak Manibhandu, Head of Research, MAC Sharaf Securities, said: “Trading volumes of the DFM have come down since November and we expect a similar pattern to continue this week. Moreover, there hasn’t been any major corporate news announcement that will encourage people to enter the markets.”

He believes that institutions and corporates will do some “window dressing” before year-end that could push up share prices.

“People are expecting a good market in 2008 and we could see ‘quiet’ accumulation happening,” he said.

Mohamed Alami, relationship manager, Naeem Shares and Bonds, said: “There’s no way of knowing where the market will be heading immediately after Eid. Any move either way could be critical and the longer the consolidation continues, the stronger the move will be.”

Sherif Abdul Khalek, Al   Futtaim HC Securities dealing room manager, echoed the same sentiment.

“Investors are wary of buying at current prices so we are seeing only sideways movement. It’s difficult to see which way the market is going. I think the market could go two ways this week,” said Khalek.

According to stock market analysts, the Abu Dhabi Securities Market (ADSM) is unlikely to see major changes, with the index remaining flat in the week.

Banking and real estate shares, which enjoyed limelight last week, will still continue to draw attention.

Aldar, Sorouh Real Estate and RAK Properties are expected to head the list of gainers, as investors are going to buy them.

“There is a strong belief among investors that Abu Dhabi’s property market will pick up next year,” Mohammed Ali Yasin, managing director of Emirates Securities, told Bloomberg.

“Foreign investors are betting on this, which is leading local speculators to follow,” said Yasin about the several real estate projects annnounced in Abu Dhabi.

In terms of news, Abu Dhabi was quiet compared to its Dubai counterpart, but the UAE capital’s fast emerging real estate sector and fast expanding banking sector paved the way for stellar gains across the market.

According to The National Investor, the UAE markets are struggling to find a trend after reaching year-highs last month.

“Expectations generally seem to be bullish as the market seems reluctant to undergo a strong correction,” it said in a report.

Stocks to watch

Real estate companies and home mortgage providers will hog the limelight this week.

Cairo-based investment bank EFG Hermes recently raised its target price for Emaar Properties and kept its “buy” advice on the stock on a higher forecast for 2008 revenue and net profit. The bank put Emaar’s long-term fair value at Dh20.4 per share, raising its 2008 revenue estimate to Dh28.2bn.

Deyaar, another property firm, will be in demand due to its strong performance. The company is expected to launch a new project in Business Bay, people familiar with the deal said. There will also be demand for mortgage providers such as Tamweel and Amlak. Tamweel was the top trader on December 17, with Dh759m shares changing hands. Shares close down 3.47 per cent to Dh7.23. EFG Hermes is bullish on the stock with four-week price target of Dh8 and a stop loss at Dh6.95.

Allied companies will get a boost as the Dubai Government is set to release the Strata Law. Meanwhile, analysts expect Aldar and Taqa to outperform market expectations. Abu Dhabi National Energy is in talks with Iran to import gas to the UAE and was planning to sell more shares.