DFM falls for the first time in three sessions

The Dubai bourse fell for the first time in three sessions yesterday and is likely to drift down further over the coming weeks, analysts warn. The Dubai Financial Market General Index dropped 0.3 per cent to 5,394 points as losers outnumbered gainers 16:9.

"The market is stuck in a tight range," said Julian Bruce, EFG-Hermes director of institutional equity sales.

"When there's a lack of news flow and a lack of general trading activity, the index tends to drift downwards rather than up. The market will be range bound from 5,200 to 5,500 points for some time to come."

Utilities was the only sector to advance, while investment suffered the largest decline. The index fell despite Emaar advancing 0.47 per cent to Dh10.55, which means yesterday was the first time this pair have moved in opposite directions since July 21.

The other blue chips had a mixed day. DFM Company and Dubai Islamic Bank fell 1.29 and 0.85 per cent respectively, with this duo, together with Emaar, typically as setting the tone for the overall market.

Emirates NBD had more to cheer, as the UAE's largest bank climbed 0.85 per cent. Du was unchanged.

Market turnover reached Dh861 million, up more than 50 per cent from the day before, but much of this extra activity was focused on debutant Takaful House, which jumped 459 per cent to close on Dh5.59.

The company has paid up capital of just Dh100 million, while its shares are restricted to UAE nationals only.

Its stellar performance also spread interest to its rival, Takaful Emarat, and together this pair claimed a combined turnover of Dh338 million, more than a third of the market total. "Investors were only really active in these stocks, they weren't interested in anything else," said Bruce.

"We saw a weakness all round, but not really any momentum selling. The market is suffering from the usual summer slowdown, while there was a net foreign outflow last week and this seems to be continuing."

The UAE's nascent mortgage sector struggled, with Amlak Finance falling by 1.1 per cent and Tamweel by 3.66 per cent.

Air Arabia enjoyed little lift from its positive second quarter figures, climbing just 0.62 per cent – or one fils - to Dh1.61, which leaves it down 19 per cent this year.

Citigroup has given the budget carrier a buy rating and a price target of Dh2.50, although it has also labeled the stock as high risk. Shuaa Capital was the chief loser, plunging 7.8 per cent to Dh6.50, its lowest close since late February.

"Shuaa was very weak with low volumes," said Bruce.

"It has outperformed the market this year, so local players seem to have cashed in some gains to chase quick profits in Takaful House. Local investors were the predominant sellers, there were no aggressive moves by foreign funds. Shuaa has been behaving strangely recently."

 

DP World down

Three of the four active stocks on the Dubai International Finance Exchange fell yesterday.

DP World was the headline loser, dropping 2.6 per cent to $0.75 yesterday after seeing 12.8 million shares change hands. This leaves it 42 per cent below its initial public offering price of $1.30.

Gold Fields was another to decline, retreating 1.43 per cent, while Depa also toiled, losing 2.99 per cent to $1.30, which is some 16 per cent short of its own IPO price.

Damas closed unchanged on $1.05 following a solitary trade.

 

Startling debut

The startling debut of Takaful House, which jumped by 45 per cent, is another sign in the blossoming interest in Shariah-compliant insurance firms in the UAE. Its rival Takaful Emarat has increased by 317 per cent since listing on the DFM on July 19, while in Abu Dhabi, Methaq Islamic Insurance has been top of speculators' shopping lists following its May debut. The latter closed yesterday on Dh7.67, having almost doubled in price since the beginning of June. "The takaful industry is relatively new and many of these smaller companies don't have much of a track record," said Julian Bruce, of EFG-Hermes.

 

Surprising performance

Dubai's stuttering performance this week has taken Ganesh Mani, a Waves Investments research analyst, by surprise.

"I expected to the index to pick up, with a rise in liquidity following the start of a new month," he said.

Mani believes the index will surge in September, with a variety of overseas mutual funds currently raising cash to invest in the Gulf markets. He added: "These will focus on the UAE and Saudi and the banking and real estate sectors in particular. Foreign institutions will return to the Gulf because the region is largely uncorrelated to global markets, which continue to struggle."