DFM surge continues on Q4 speculation

Equities on the Dubai Financial Market surged ahead for a second consecutive session yesterday as fourth-quarter earnings kept investors' hopes alive.

Investors were optimistic about the prospect of a recovery on the region's markets as they are likely to take positive cues from the US markets and the oil price rise.

Despite losses by some stocks major sectors like finance and investment, banking, real estate, utilities, telecoms, insurance and transport closed on a higher note.

Mirroring the positive market sentiment, the DFM general index closed 1.46 per cent higher at 1,648.46 points, up 23.71 points from the previous close of 1,624.75. After remaining range-bound for much of the day the index surged by 20 points late in the session as gains by Emirates NBD and Emaar supported the market's movement.

"Both UAE markets closed higher," Eyad Abdulnabi, COO of Al Ramz Securities, told Emirates Business. "Some companies have announced better-than-expected results for the fourth quarter and the whole of 2009."

The market moved in a 15-point range for most of the session as Emaar was trading flat, while Dubai Investments and Deyaar stocks were reeling under pressure. Trading volumes were low as the market was suffering from a liquidity problem. Market bellwether Emaar moved 2.84 per cent higher to close at Dh3.26.

Shiv Prakash, a senior technical analyst at MAC Capital, said: "Market circles expect good results from Emaar and the stock is witnessing some bullish moves from its support levels. It traded close to the neckline resistance level of Dh3.25, and if it breaks through this it could extend its gains until the next resistance level of Dh3.50."

Yesterday's session opened on a positive note at 1,636.54 points but the index immediately slipped to 1619.30 – which remained the day's low – owing to quick profit booking. After moving in a narrow range, the index picked up in the last hour of trading as Emirates NBD and Emaar closed higher. The index reached its day's high of 1,649.90 points just before closing at 1,648.46.

"Intraday, if the market remains above the pivot level of 1,639 we could see a rally until the 1,660/1,670 resistance," added Prakash. "A break below the pivot could bring bearishness until the support level of 1,627."

The DFM is expected to continue moving sideways as long as the liquidity crunch persists. The market is witnessing roller-coaster movements owing to low volumes and day-trade deals.

Ajman Bank, Al Salam-Bahrain, Dubai Islamic Bank and Gulf Finance House (GFH) closed lower, while Commercial Bank of Dubai closed flat at Dh3.82.

Some banks have made provisions for debts and this is resulting in either flat or negative figures for 2009, including the fourth-quarter numbers. Most of the banks are cleaning up their balance sheets with high provisions, and as a result investors are optimistic that this year is promising for the sector.

The DFM saw marginal trading turnover of Dh310.21 million and volume of 171 million shares in 4,017 deals involving 27 stocks. The limited buying support on the market pushed 14 stocks higher and quick profit taking and cautious selling dragged nine lower, while four closed at their previous levels.

In the realty sector, Deyaar, Drake & Scull International and Union Properties (UPP) closed lower while Emaar and Arabtec moved northwards.

Market heavyweight Emaar registered Dh161.19m of trading, accounting for 51.86 per cent of the total trading on the bourse. It was followed by DFM with Dh37.50m, Arabtec with Dh32.11m, DIB with Dh12.83m and DSI with Dh10.78m. The other major volume churners were Emaar with 50.23 million shares, DFM with 23.11 million, UPP with 14.64 million shares, Arabtec with 13.83 mn shares and DSI with 12.24mn shares.

The day's top gainers were Emirates NBD, GGICO, Takaful Emarat, Shuaa Capital and DFM, while the main losers included Hits Telecom, Ajman Bank, Deyaar and UPP.


A Sigh of relief for market

The DFM has been trading flat recently because of a lack of buying interest but market players believe the continuing release of fourth-quarter figures may trigger a renewed buying binge.

The earnings season has provided a fresh breather for investors and institutions at a time when the market was reeling under pressure in the absence of any positive triggers.

The UAE bourses ended yesterday's session on a modestly bright note as investors breathed a sigh of relief at the absence of any major fourth-quarter earnings shocks. Some companies have announced fourth-quarter results below analysts' forecasts, but investors are nevertheless reacting positively to the latest numbers from the corporate sector.

Emaar is attracting investors as they expect to hear positive performance numbers for the fourth quarter.

"We need companies such as Emaar to come out with promising earnings numbers so that the market can move higher," said Eyad Abdulnabi. "Emaar will set the tone for the next level of trading."

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