News
All traded stocks on Dubai index end in red
The Dubai Financial Market (DFM) yesterday witnessed a day of losers. All the 25 stocks traded on the bourse declined, pushing the DFM General Index down 1.48 per cent to close at 5427.45 points.
The poor performance marks a downturn in what market analysts called the beginning of a two-month period of low trading in the UAE markets.
Trade value on the DFM dropped to Dh854.8 million yesterday, compared to Dh2.17 billion in Thursday's session. The DFM trade volume also declined to 229.1 million shares, less than 50 per cent of Thursday's volume.
Jeema, Ekttitab, Gulf Navigation and Ajman Bank topped the list of losers, while Emaar dragged the index down after closing at Dh 10.65. The stock hit the Dh10.55 level in intra-day trading – its lowest in six months.
Analysts attributed the current decline to three main factors – a sharp decline in foreign institutional investments, slump in emerging and developed markets after global banks began to announce further write-offs as a result of sub-prime exposure and the complex geopolitical factors in the region.
"The difference between foreign investments last week reached Dh750m as sell aggregate. If we add Arab investments, the total foreign investments reached Dh870m as aggregate sell. We witnessed the same trend in the UAE markets in yesterday's session," said Mohamad Al Behieri, head of trading at Amana Financial Services.
"Institutional investors are liquefying positions due to the continued decline in dollar value and its simultaneous effect in the value of the dirham. Even if they achieve profits in local stock markets, this will not compensate losses from currency depreciation. We saw many institutional investors shifting capital to other markets," he added.
Fadi Al Saeed, head of equity at ING Investment Management Middle East, added the current decline in emerging markets and new announcements by global banks of further losses fuelled negative sentiment among institutional investors. "Stocks with high exposure to foreign investments such as Emaar were hit by this flight of capital as institutional investors became more interested in liquefying positions ahead of expected losses in the international markets.
"Despite this we witnessed an increase in foreign investments during the past few months but this money is staying on the sides and not trading in the market. However, this is a short-term trend among institutional investors as part of their risk management."
Al Saeed also highlighted the issue of increasing speculation on cheap stocks in absolute terms. "Expected second quarter results of listed companies are already priced by investors, so the impact of announcing these results will be marginal on the market. This has increased speculations on both DFM and ADX."
Motaz Al Demerdash, CEO of Sharjah Islamic Services, blamed part of the current decline on the DFM because of trading in new stocks such as Ajman Bank and Ekttitab.
"We saw Ajman Bank achieve 500 per cent gains immediately after the stock was listed and then started to decline. Profit-taking was very clear in trading on Ajman Bank after the stock achieved gains of more than 40 per cent last week. We expect the same scenario will take place on Ekttitab over the next
few days."
He warned that if the DFM opens down today, there will be sharp declines in the value and volume of trading.
Abu Dhabi gains seven points
Abu Dhabi outperformed Dubai yesterday. The Abu Dhabi Securities Market gained seven points or 0.14 per cent and closed at 5087.96 points. Trading value reached Dh2.52 billion and 543.5 million shares were traded.
Speculations dominated trading with around 75 per cent of the total traded value going to Methaq, RAKCC and Agthia.
"These stocks achieved high and unjustified gains during the past 10 sessions and now we are seeing heavy profit-taking. Methaq gained Dh2 last week and now its price is falling, but there is still heavy trading in the stock," said Motaz Al Demerdash, CEO of Sharjah Islamic Services.
Demerdash said heavyweight real estate and banking stocks were not moving and this stabilised the ADX. "High trading on small stocks could not push the index forward, while leading stocks are holding the index from dropping. However, prices of leading stocks are very encouraging and this may support the index when the current negative sentiment ends."
The poor performance marks a downturn in what market analysts called the beginning of a two-month period of low trading in the UAE markets.
Trade value on the DFM dropped to Dh854.8 million yesterday, compared to Dh2.17 billion in Thursday's session. The DFM trade volume also declined to 229.1 million shares, less than 50 per cent of Thursday's volume.
Jeema, Ekttitab, Gulf Navigation and Ajman Bank topped the list of losers, while Emaar dragged the index down after closing at Dh 10.65. The stock hit the Dh10.55 level in intra-day trading – its lowest in six months.
Analysts attributed the current decline to three main factors – a sharp decline in foreign institutional investments, slump in emerging and developed markets after global banks began to announce further write-offs as a result of sub-prime exposure and the complex geopolitical factors in the region.
"The difference between foreign investments last week reached Dh750m as sell aggregate. If we add Arab investments, the total foreign investments reached Dh870m as aggregate sell. We witnessed the same trend in the UAE markets in yesterday's session," said Mohamad Al Behieri, head of trading at Amana Financial Services.
"Institutional investors are liquefying positions due to the continued decline in dollar value and its simultaneous effect in the value of the dirham. Even if they achieve profits in local stock markets, this will not compensate losses from currency depreciation. We saw many institutional investors shifting capital to other markets," he added.
Fadi Al Saeed, head of equity at ING Investment Management Middle East, added the current decline in emerging markets and new announcements by global banks of further losses fuelled negative sentiment among institutional investors. "Stocks with high exposure to foreign investments such as Emaar were hit by this flight of capital as institutional investors became more interested in liquefying positions ahead of expected losses in the international markets.
"Despite this we witnessed an increase in foreign investments during the past few months but this money is staying on the sides and not trading in the market. However, this is a short-term trend among institutional investors as part of their risk management."
Al Saeed also highlighted the issue of increasing speculation on cheap stocks in absolute terms. "Expected second quarter results of listed companies are already priced by investors, so the impact of announcing these results will be marginal on the market. This has increased speculations on both DFM and ADX."
Motaz Al Demerdash, CEO of Sharjah Islamic Services, blamed part of the current decline on the DFM because of trading in new stocks such as Ajman Bank and Ekttitab.
"We saw Ajman Bank achieve 500 per cent gains immediately after the stock was listed and then started to decline. Profit-taking was very clear in trading on Ajman Bank after the stock achieved gains of more than 40 per cent last week. We expect the same scenario will take place on Ekttitab over the next
few days."
He warned that if the DFM opens down today, there will be sharp declines in the value and volume of trading.
Abu Dhabi gains seven points
Abu Dhabi outperformed Dubai yesterday. The Abu Dhabi Securities Market gained seven points or 0.14 per cent and closed at 5087.96 points. Trading value reached Dh2.52 billion and 543.5 million shares were traded.
Speculations dominated trading with around 75 per cent of the total traded value going to Methaq, RAKCC and Agthia.
"These stocks achieved high and unjustified gains during the past 10 sessions and now we are seeing heavy profit-taking. Methaq gained Dh2 last week and now its price is falling, but there is still heavy trading in the stock," said Motaz Al Demerdash, CEO of Sharjah Islamic Services.
Demerdash said heavyweight real estate and banking stocks were not moving and this stabilised the ADX. "High trading on small stocks could not push the index forward, while leading stocks are holding the index from dropping. However, prices of leading stocks are very encouraging and this may support the index when the current negative sentiment ends."