Lower-than-expected results from Arabtec and DFM coupled with a poor response to announcements of dividends and bonus shares took their toll on the Dubai Financial Market yesterday.
The market was reeling under pressure owing to uncertainty and a severe liquidity crunch, which resulted in lacklustre trading in a restricted range.
There was no trading in materials and consumer staples while the telecom and utilities indices closed flat. The realty, transport, finance/investment, banks and insurance sectors closed in the red.
Small retail investors and speculators engaged in day trading were the only active players and the market was otherwise in a lull as the institutions stayed away.
Reflecting the dampened market sentiment, only two stocks advanced, 16 declined and 12 closed flat. Al Salam Bank-Bahrain and Al Salam Bank-Sudan were the only gainers as they added 3.33 per cent and 1.85 per cent respectively to close at Dh0.93 and Dh2.75.
"The much-awaited results from Arabtec and DFM dampened the market sentiment further," Robert McKinnon, Chief Investment Officer at ASAS Capital, told Emirates Business. "Market players are waiting for a clear picture to emerge."
Yesterday was the last trading session for the entitlement of dividends declared by Commercial Bank of Dubai (CBD) and OIC. Later OIC informed the exchange that it had postponed its EGM owing to the lack of a quorum. The annual meeting of Ascana was held yesterday.
Trading in AOIC shares resumed after the company disclosed the resolutions approved yesterday at its AGM and EGM. Banking major Emirates NBD told the exchange that its AGM and EGM would be held on March 24, and EIB disclosed its results to the exchange.
Tabreed, which closed flat at Dh0.61, informed the exchange that its board would meet on next Sunday to consider the unaudited financial results for 2009, review the business and appoint a new director.
GGICO's shares eased 2.17 per cent ahead of its board meeting and closed at Dh0.90.
Meanwhile the DFM suspended trading in Takaful-Emarat from 12.30pm yesterday as its board met. Trading will resume once the company's results are disclosed to the bourse. The stock eased 1.01 per cent during the two-and-a-half hours of trading and closed at Dh0.98.
Turnover at low EBB
The DFM recorded bleak volumes yesterday owing to the absence of institutions from the market.
The bourse registered turnover of Dh105.77 million as only a flurry of last-minute deals prevented it from recording the lowest daily turnover seen so far this year. The trading value stood at Dh97m just 10 minutes before the close.
The lowest daily trading figure so far this year was Dh99m is recorded last week.
As the fourth-quarter results have been priced in, key factors such as Dubai World's restructuring plan and the liquidity crunch will continue to dominate the market.
"Foreign investors are waiting for Dubai World," said Robert McKinnon. "Until then trading is likely to remain under pressure."
The exchange saw more than 76 million shares change hands in 1,853 deals involving 30 stocks.
Dismay over Aramex bonus
Investors appeared disappointed by Aramex's announcement that it was going to issue bonus shares as they had been anticipating a cash dividend.
The board recommended a 10 per cent bonus share dividend.
In a bearish market the issue of bonus shares generally leads to a price adjustment and does give any monetary benefit to investors.
"Investors like to receive a cash dividend rather than bonus shares in a falling market," said Robert McKinnon.
Aramex fell 2.86 per cent to close at Dh1.70 and the stock was one of the day's top five volume churners as it recorded trading of Dh4.59m and volume of 2.70 million shares.
Arabtec, DFM under pressure
Arabtec and DFM confounded expectations yesterday as they put the market under pressure when investors started selling the stocks.
Arabtec posted its first quarterly loss since its listing on the bourse and the DFM's net profits for 2009 slipped 42.7 per cent. The five per cent cash dividend announced by DFM failed to cheer the investors.
"The market was waiting hopefully for the results from Arabtec and DFM," said Robert McKinnon. "But in the event the results disappointed the market. DFM has quite a strong cash position on its balance sheet and can afford to pay a larger dividend."
Arabtec and DFM fell 1.9 per cent and 1.4 per cent respectively.
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