Turnover on the Dubai Financial Market (DFM) yesterday hit the highest level since January 23, 2008, with the number of shares traded increasing to 1.043 billion.
Turnover by value, at Dh1.496 billion, was the highest since October 15, 2008, although the DFM General Index succumbed to profit-taking after Thursday's bull run and dropped 4.33 per cent yesterday. The increasing turnover is being seen as a result of new liquidity coming to the market since the beginning of the month as institutional investors build up short-term positions. The trend increased last week with local and GCC investors injecting more liquidity, targeting select stocks, especially DFM, Emaar and Arabtec.
Some market analysts believe that UAE banks may have resumed lending for stock investments, giving local investors more access to liquidity. Overall stock market liquidity is expected to remain at high levels at least during the next two weeks, but may change its behaviour in short term, one analyst said.
"The new liquidity was targeting DFM, Emaar and Arabtec stocks during the past two weeks, but we expect it to start moving to new stocks in the market, targeting those that were not moving for a long time," said Hosam Al Husseini, head of brokerage at Emaar Financial Services. A part of this liquidity might move to the Abu Dhabi Securities Exchange in the near future, creating more volatility on the capital's bourse, he said.
The Dubai index has witnessed wild swings in the past few sessions, which analysts ascribe to the injection of new liquidity. It advanced more than five per cent on Thursday and then lost most of its gains yesterday, closing 4.33 per cent lower at 1531.88 points.
"Heavy volatility was seen in the market [yesterday] with the index opening lower by 45 points and the very next moment a sudden volume push taking it higher by 22 points," said Mac Capital Advisors equity analyst Shiv Prakash.