DFM partially recovers but ADX continues to slide

The Dubai Financial Market recouped some of Tuesday's losses, but Abu Dhabi fell another 55 points yesterday. The DFM's General Index climbed 0.66 per cent to 5,597 points in a topsy-turvy performance.

After a confident start, the Dubai index suffered a mid-morning slump to slip below 5,500 points, but this triggered a rapid resurgence that saw it jump more than 100 points to climb above the former prop of 5,600. However, it couldn't sustain this level and slumped to the above close.

"Foreign investment is still evident, but they're being very patient," said Julian Bruce, EFG-Hermes director of institutional equity sales. "All the talk has been about technical and not fundamental issues. The DFM tried and failed to break through 5,850, so local investors just assumed that it would start to track back. This saw the index fall towards 5,500 before finding support just above the 5,475-mark.

"The latter was a psychological support for local investors, with buying kicking in very quickly when the index reached this range. This enabled some of the stocks that have been suffering recently to bounce back."

Meanwhile, the Abu Dhabi Securities Exchange fell for a second day. As this column warned yesterday, the ADX uses average prices for stocks' closing figures and so the full extent of Tuesday's decline was likely to be understated.

This seems to have been underlined yesterday, with the ADX falling 1.07 per cent to 5,063 points, its biggest one-day reverse for four weeks.

Dubai's turnover was the highest since June 5, with Dh1.2 billion of shares changing hands, although in volume terms it was slightly down on the day before.

Yesterday was a mixed day for the most active stocks. Top trader DFM Company returned to form, climbing 2.61 per cent, but second-placed Air Arabia closed flat and third and fourth Dubai Islamic Bank and Deyaar fell 2.27 and 0.9 per cent respectively.

"Dubai Islamic saw some buyers come in at Dh8, which helped it recover, although it fell away again a little after this," said Bruce.

The bank closed at Dh8.18, its lowest finish since late September 2007.

Emaar was the biggest trader in cash terms, claiming almost a fifth of the market total and this demand pushed it up 1.8 per cent to Dh11.30.

Meanwhile, Methaq again dominated trading on the ADX, topping both the volume and value charts to leap another 8.67 per cent and take its gains this week to a staggering 38 per cent.

Taqa's slide continued, with the energy firm plunging 9.79 per cent amid the fallout from its bungled bond announcement. It has lost 15 per cent in a week.

Aldar Properties also retreated, slipping 1.14 per cent to Dh13.05, while rival Sorouh dropped 2.02 per cent.

"Aldar and Sorouh have been doing pretty well recently, but the negative trend in Dubai was bound to lead to some profit taking on the ADX as well," said Bruce.

"This was directed at a lot of the blue chips and their weighting pulled the index down."

The capital's volumes fell to a three-day low, although total trading was worth a reasonable Dh1.7bn.

Market leader etisalat added a modest 0.25 per cent, but the next four largest companies all declined. These are National Bank of Abu Dhabi, First Gulf Bank, Aldar and Abu Dhabi Commercial Bank. FGB was worst hit, dropping 2.07 per cent after hitting a 52-week high on Monday.

Q2 results awaited

After the turmoil of the past week, analysts are hoping investors will now focus on the impending second-quarter results.

Brokers report the market is currently riddled with uncertainty, while geopolitical risks and regional security concerns have been adding

to these doubts. "Hopefully these will be forgotten and people will start talking again about Q2 figures," said Julian Bruce, EFG-Hermes director of institutional equity sales. "The ADX is taking a breather, but the trend remains upwards, while Dubai has fallen on a technical basis and could yet fall through 5,500 points again.

"I don't think there will be a sharp upward movement. Investors will look to build positions around the current levels because valuations are more attractive than they were before."

With the DFM lagging far behind the ADX this year, Bruce said it could be primed for a pick up towards the end of June.

"The market is trading on a technical basis, which is fairly unusual but tends to happen in the absence of any news," Bruce added.

DP World advances

DP World made its first advance since May 30 yesterday, rising 1.11 per cent to $0.91 as just over two million of its shares were traded.

Depa also ended in the green, climbing 1.34 per cent to $1.51, but Kingdom Hotels fell 2.34 per cent to $6.25.

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