The Abu Dhabi Securities Exchange is moving in a stable pattern, indicating that consolidation is happening. The ADX General Index is expected to find a bottom in the medium term, analysts said.
The index continued its retreat for the third session yesterday and closed at 2,201.18, slightly lower by 7.78 points, or 0.35 per cent. Since the market faced resistance at 2,275 points, it is taking a downturn trend to its next support level at 2,150 points.
The turnover also declined significantly as trade volume reached 107.1 million shares and the traded value dropped to Dh183.2 million. Real estate and banking stocks continued to dominate the market as Aldar, Sorouh and Ras Al Khaimah Cement represented around 47 per cent of the total volume, while Abu Dhabi Commercial Bank and First Gulf Bank attracted around 18 per cent. Dana Gas continued to top the most-active list with more than 20 million shares changing hands.
The ADX is seen as consolidating and stabilising in the short term due to calm movements in the index. "There is stability in the ADX due to the support from local institutions which are building long-term positions. Also, the outlook of some stocks is positive, which is encouraging speculators to become long-term investors," said Hosam Al Guindi, general manager of Electronic Stock Brokerage.
"Real estate stocks in the ADX are expected to recover quickly due to their positive outlook, as they started their operations after the boom in Dubai and their leverage is low compared to real estate companies in Dubai. Also, the demand for property in Abu Dhabi is relatively strong as there are increasing deals in land sales."
Hesham Bakry, institutional sales manager at Al Futtaim HC Securitiers, said volatility is low on the ADX and there is a tendency towards reversing the general trend in the market. "Positive news and government actions such as the support to banks is creating more positive sentiment in the market. Speculation is declining while most of the liquidity is targeting long-term investments."
Bakry said the movements of foreign investors in the ADX are limited, while the main players are local investors, especially institutions. "Institutions have a calm investment strategy and this is supporting the market's stability. Foreign investors are entering the market from time to time, targeting certain stocks for long-term positions."