The Dubai Financial Market fell for the fourth session running yesterday amid dwindling volumes.
The DFM's General Index lost 0.74 per cent to close on 5,643 points to bring its losses this month to 1.64 per cent as analysts' earlier predictions of a major May rally look ever more forlorn.
The Abu Dhabi Securities Exchange (ADX) fared little better, slipping 0.25 per cent to 5,005 points to leave it virtually unchanged for the past four weeks.
"We have seen some heavy profit-taking ahead of the listing of Ajman Bank," said Ayman El Saheb, Darahem Financial Brokerage director of operations. "Global markets have also not been faring well, but yesterday there was some buying back of selected UAE stocks. This indicates we might see a rebound today or certainly later this week."
Mohammed Ali Yasin, Emirates Securities managing director, is less confident, instead predicting more of the same. "There is a vacuum of information, with very little company news to stimulate the market," he said.
"The quarter two results are more than a month away and the market will continue to move in a tight sideways manner for the time being."
Since hitting a nine-week high on May 8, the Dubai index has retreated 3.2 per cent, a decline mirrored by Emaar, which has fallen 3.8 per cent over the same period.
Investors are stubbornly refusing to show any faith in the developer, despite upbeat broker forecasts and enticing fundamentals.
Turnover on the DFMGI slumped to Dh642m yesterday, the second smallest daily total over the past four weeks – the lowest was on Wednesday.
Three of Dubai's top four most traded stocks fell yesterday, with the most active, DFM Company, dropping 0.87 per cent, while second and fourth placed Air Arabia and Deyaar declined by 1.01 and 0.43 per cent respectively.
The gainers chart was also revealing, with the three best performing stocks enjoying a combined volume of just 214,000 shares. Gulf Navigation offered the one significant bright spot, adding 0.55 per cent after 27 m of its shares changed hands to make it Dubai's third most active stock.
Turnover on the ADX was more than double that of Dubai as the capital saw Dh1.3 billion of shares traded. Agthia claimed a quarter of this, with 118m shares totalling Dh275m changing hands. In volume terms, this more than 13 times its daily average over the past year, so why the sudden spike?
"Funds are picking up Agthia shares, as well as buying into the likes of Methaq and Rapco," said Saheb.
"There's no obvious reason for this accumulation, and it's impossible to say where the funds want to take these stocks."
Agthia jumped 7.41 per cent to Dh2.32 to take its gains over the past two sessions to 12.6 per cent. Analysts report that Dh2.70 will be its medium term target.
Stock trading takes a hit
Stock trading has slumped as speculators chase bigger returns in the real estate sector.
Last week's Cityscape Abu Dhabi exhibition sent real estate prices soaring in the capital as speculators put down minimal deposits to secure new off-plan properties in anticipation of making a quick sale for a huge profit in the secondary market. "Speculators have realised they can make bigger short term returns in property, especially in Abu Dhabi," said Mohammed Ali Yasin, Emirates Securities managing director.
"The jump in prices at Cityscape was phenomenal and provide an indication that prices have been raised by speculators and not by end-users.
"These people can make returns on 100 per cent of the value of the property with a deposit that is only a fraction of its total cost, but the test will come if they're not able to sell. Will they be able to pay the 40 per cent owed in nine months' time?"
Prices have hit such levels that they will be unsustainable for end-users. With the market ripe for a nasty surprise and prices expected to stabilise in the long term, investors will switch to equities by September, Yasin said.