DFM declines further on lacklustre trading

The Dubai Financial Market (DFM) moved downwards for the third session in a row yesterday as market players remained hesitant about taking any fresh positions.

Mirroring the lacklustre trading, the general index eased marginally by 1.98 points, or 0.12 per cent, to close at 1,679.94 compared with last week's close of 1,681.92.

"Everybody is waiting for the second quarter results from the corporate sector," Hesham Bakry, Institutional Sales Manager at Al Futtaim HC, told Emirates Business. "Investors don't want to take new positions as the uncertainty about the near future of the market is impacting sentiment."

Most investors are uncertain about the future direction of the market. Since June 14, the DFM has slipped into a bearish phase as the index has fallen by 23.58 per cent from 2,198.31 points – a net drop of 518.37 points.

The absence of buying interest is highlighting the "wait and watch" attitude of the market as investors and institutions await second quarter results.

The index, led by Emaar and other property shares, rose to yesterday's high of 1,695.39 points yesterday early in the session. Union Properties rose 2.4 per cent at one point and Dubai Islamic Bank also climbed. The index moved in a narrow range of 18 points throughout the session and touched a session low of 1,663.41.

Bank stocks remain under pressure as there is no clear picture about the impact of the UAE banks' exposure to the troubled Saudi-based Saad and Algosaibi groups. On the other hand, Standard & Poor's downgrading of its rating for Emirates NBD units also influenced the trading sentiment. Emirates NBD shares fell for a third consecutive session.

Other major losers included Arabtec and Shuaa Capital. Shuaa Capital said it was in the process of seeking damages for its investment in Orion Holdings Overseas. Meanwhile, Mazaya informed the bourse that its board meeting would be held today.

Logistics firm Agility shares rose on the news the company got the $128 million vehicle-storage contract for five years from the US army. Agility announced yesterday that it had won three vehicle-storage contracts from the US Army Management Command.

Shiv Prakash, technical analyst at MAC Capital, said: "The market closed almost flat with very thin volumes and the performance was mixed as a few stocks closed in the green and a few ended in the red. Emaar managed to close higher by 2.11 per cent at Dh2.42."

Aramex closed 1.53 per cent higher at Dh1.33, UPP was up by 1.19 per cent at Dh0.85 and DIC closed 0.89 per cent higher at Dh1.14. Arabtec closed 3.97 per cent lower at Dh2.42, Shuaa Capital fell by 7.38 per cent to Dh1.38, Al Firdous was 4.17 per cent down at Dh0.92 and Emirates NBD closed 3.05 per cent lower at Dh3.18.

Mathew Wakeman, Managing Director for Cash and Equity-linked Trading at EFG Hermes, said: "The markets remain quiet and are following the U-shaped trend that has become the norm recently. Positive opens fizzle out mid-session and claw back lost ground towards the close. Investors in the UAE markets are essentially circling in a holding pattern waiting for results. It's very much a buyer's market right now and the smart ones are sitting lower and waiting for prices to come to them."

The finance and investment index closed 0.36 per cent higher and the real estate index, transport and telecom indices also closed flat with gains of less than one per cent. The bank, insurance and utilities indices closed in the red. Oil price movements are expected to influence the trading pattern in the absence of any major local news as investors are taking cues from oil prices and global markets.

The DFM has slipped into a period of long-term uncertainty that has resulted in the current short-term bearish trend. Technical charts indicate the market is moving below the 100-day moving average and this reflects the bearish trend.

Deyaar has announced its Q2 results. It posted a fall of 69 per cent in its net profits, which eased to Dh75.4m for the second quarter as against Dh246.9m in the corresponding period in 2008. Its net profits more than doubled in 2008 when compared with 2007.

Investors are waiting to see corporate financial results from blue chip companies before pumping money into the market. Added to this, the long haul of summer is likely to push the market into sideways trading in the short term.



Trading at low EBB

Mirroring the gloomy trading sentiment, the DFM recorded low turnover of Dh197 million as 149 million shares were traded in 3,422 transactions in stocks.

"We are waiting for the second quarter results," said Hesham Bakry. "Trading volume and turnover will improve only after the results appear. Until then the current bleak situation is likely to continue. However, any positive news from the global markets may improve the situation."

Eight stocks advanced and 11 fell while five remained unchanged. Arabtec, Emaar, DFM, Deyaar and DSI were the main trading value pushers. With more than Dh48m of turnover Arabtec led the market heavyweights such as Emaar, which recorded Dh35m trading, DFM (Dh28m), Deyaar (Dh27m) and DSI (Dh16m).

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