DFM fails to hold on to gains, ADX closes higher

The ADX is continuing its slow but solid upward trend

The Dubai Financial Market General Index yesterday failed to hold over the 5,800 points level. It started the session with a strong upward trend and jumped to 5,837 points before it reversed direction and dropped to a low of 5,761 points. However, it turned upward again before the end of the session and closed at 5.790.69 points.

Traded value declined to Dh1.44 billion compared to Dh2.36bn in Monday's session. Volume also dropped to 336.7 million shares, or around 45 per cent compared to the previous session.

The Abu Dhabi Securities Exchange General Index continued its slow but solid upward trend and gained 20.56 points to close at 5,113.43 points, just above the psychological level of 5,100 points. It also continued the same level of traded value at Dh1.97bn and volume of 484.6 million shares.

Analysts said the DFM is still in the upward trend and blamed profit-taking for yesterday's decline.

Ahmed Abdul Rahman, head of research at Amana Financial Services, said profit-taking dominated trading and this created pressure on the DFM index.

"The DFM is still over the support level of 5,785 points and this will help the index to surge during the next period. There is no indication of downward trend."

Alaa Mostafa, trading manager at EFG Hermes, added: "The DFM showed upward trend during the last 10 sessions and it is healthy to halt this trend for a while for profit-taking to prevent any sharp corrections. The market will continue the upward trend during the next period.

"We noticed strong transactions on ADX during the past week and then the liquidity started to move to the DFM during the last two sessions. This pressure on the DFM created the current profit-taking as investors are varying their positions," he said.

"Dubai shares declined for the first time in six days, which was very reasonable after the six days upward escalating wave. For the UAE market in general we are still seeing a lot of interest in the real estate sector and its stocks as well as the insurance sector," said Nadine Wahbe, senior market analyst at Orion Brokers.

"What has been really apparent lately is the liquidity balancing between the DFM and ADX, which means the concentration and turnover are not monopolised by any one exchange. We noticed a lot of shift in investors' movements to build up positions in a selective pool of stocks on ADX," she said.

"Also, we have seen a change in the investment behavior, reflecting an increasing interest in the elasticity of investment decision towards fundamentals of companies and their stocks. For example, we are seeing a decrease in prices of stocks when companies are about to increase their debt, which means they would have higher exposure as per their debt-equity ratios," Wahbe said. However the Emirates Securities Market Index increased by 0.05 per cent to close at 6,307.33 points yesterday. Market capitalisation has gained Dh0.48bn to reach Dh879.16bn. A total of 82 billion shares were traded with a total value of Dh3.42bn on the two exchanges on Tuesday.

The industry sector increased by 0.31 per cent, followed by the banking sector that increased by by the same percentage. The insurance sector decreased by 0.03 per cent. A total of 72 stocks out of 123 companies listed were traded – 30 companies advanced, 37 declined and the rest remained unchanged.

RAK Cement most active company

RAK Cement on Tuesday topped the list of most active companies on the Emirates Securities Market Index with a traded value of Dh1.07 billion distributed over 28 million shares through 3,149 transactions.

RAK Cement also dominated transactions on the ADX, as around 50 per cent of the total trade value focused on the stock. "RAK Cement stock was the main active stock during the last 10 sessions and its price jumped more than 30 per cent during the last week.

News of the increasing building material prices and expectations of high profits fuelled speculation in the stock," said Ahmed Abdul Rahman of Amana Financial. Emaar Properties was the second most active as 16.87 million shares worth Dh200 million were traded through 574 transactions.

"Emaar has been stable during the last two weeks and this helped the DFM to continue its upward trend. The stock started slow movements during the last few sessions and it is projected to have more movements within the coming transactions," said Alaa Mostafa of EFG-Hermes.