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23 February 2024

DFM closes higher on selective buying

By Mohamad Al Kady

Leading active stocks in Dubai Financial Market (DFM) bounced up at the end of yesterday’s session, pushing the index to close in the positive area after sharp fluctuations.

The DFM index added 9.40 points, or 0.60 per cent, and closed at 1565.48 points after going down to 1540 points during intraday trading. The index continued to track movements in bellwether Emaar Properties, which fluctuated between Dh2.84 and Dh2.97 before ending the session at Dh2.95, registering a gain of 1.72 per cent.

Arabtec moved in a relatively wide range – between Dh2.07 and Dh2.17 – before ending the session up by 3.35 per cent at Dh2.16. The DFM stock also added 2.76 per cent to close at Dh1.49. Union Properties remained the top active stock for the second session amid continued selling pressures due to worries about the company’s financial position. The stock was also the top loser in the market and fell 5.56 per cent to close at Dh0.51. It hit an all-time low of Dh0.49 during intraday trading.

However, the negative impact of the UPP stock on leading real state stocks was broken yesterday compared to trading on Monday. Emaar was able to bounce up from its intraday lows and closed in the positive area even after UPP had cast a negative outlook for real estate stocks. Emaar also bounced amid increasing rumours in the market that the company might release its 2009 results during the weekend.

“The market is still focusing on negatives rather than positive indicators,” said Ehab Rashad, Trading Manager at Direct Broker for Financial Services. “Results announced so far have showed that companies in Dubai have passed the recession stage and are entering positive territory again. There is also positive news about the merger between Amlak and Tamweel and the market is waiting for a governmental confirmation. This is expected to give a shot in the arm to sentiment. Results of listed companies remain the main movers of sentiment at the current stage, but, unfortunately, investors are still looking at the negative side.”

Despite the bounce, turnover continued to decline, with 209.3 million shares worth Dh242.2m changing hands. UPP was the top active stock while Emaar, Arabtec, DFM and DSI stocks attracted good turnover.

Rashad also highlighted the negative impact of foreign investors on the market sentiment. “There is continuous concentration on the movements of foreign investments in the market. Foreign investors are moving according to their own strategies, which should not affect investment decisions of other investors. Foreign investors represent a small section of DFM compared to local, Arab and GCC investors. There is a deep, unhealthy trend of tracking foreign investors’ movements. This trend should end and the market participants need to set up their own investment strategies,” he said.

“The negative impact of corrections in global markets and the sharp decline in the turnover are giving negative indicators in DFM. US markets rallied sharply and the correction was expected while the situation is far different in DFM and this correlation is not justified. The index is facing a critical support area at 1530 points in the near future and the market should maintain this level.”

Shiv Prakash, Equity Investment Analyst at MAC Capital Advisors, said DFM has been under continuous selling pressure for the past few days with some bounce seen in between, followed by selling pressure again from higher levels, which wiped off the gains and caused the market to close on new lows.

“Overall the index is much closer to the long-term support levels of 1460-1430 points and one can look to accumulate good growth stocks from these levels for long-term returns – such as Air Arabia, Aramex and du stocks,” he said. “The trend in the market is still down and a corrective bounce can start only on a break above the 1655 points resistance, which, if it happens, can lead to a further rise until the neckline resistance levels of 1730. There are no signs of fresh fund flows as yet in the market.”


DIC advances

The DIC stock advanced 3.49 per cent yesterday to close at Dh0.89. The company announced net profits of Dh963 million in 2009, a 39.2 per cent drop compared with the Dh1.583 billion reported in 2008. Earning per share reached Dh0.27.

The company’s revenues also declined to Dh3.672bn last year compared with Dh4.357bn in 2008. However, assets of Dubai Investments surged to Dh15.145bn last year against Dh14.237bn in 2008.

Ehab Rashad, Trading Manager at Direct Broker for Financial Services, said the results should give positive indicators for investors. “Earnings per share represent about 30 per cent of the current market price and this is very positive in current conditions. There is wide agreement among investors that dividends this year will be weak or even non-existent. The market has already absorbed this situation, but we need to focus on positives, as there are indicators that some companies have achieved profits even during a difficult year.”


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