Dubai blue chips advance as Emaar declines

A stuttering Emaar restricted the Dubai Financial Market to a 21-point gain yesterday, although the other blue chips all advanced.

While investors appear unimpressed by Emaar's second quarter figures, they have at least banished a potential cloud from the market, enabling the DFM's General Index to snap a three-day losing streak as it closed up 0.4 per cent at 5,243 points.

This was a modest finish after the index hit an intraday high of 5,281 points, with these gains eroded in part by Emaar's slump.

The property developer climbed 1.5 per cent in early trading, but closed down 0.5 per cent at Dh10 following late selling pressure.

"People were expecting a little bit too much from Emaar's results, which were in line with most forecasts. Emaar fell and dragged down the rest of the market," said Sanyalaksna Manibhandu, Emaar Saudi Financial Services head of research.

Other analysts have said that trading must maintain above Dh1 billion for at least three consecutive sessions for the DFM to mount a decent recovery and the index fell well short of this milestone yesterday, with turnover slipping to a week-low of Dh763 million.

"We're disappointed by the market and thought there might be buying on both Thursday and yesterday, but the UAE exchanges obviously have their own problems in terms of investors being away on holiday," said Manibhandu. "Investors haven't responded to the Q2 figures, which would suggest they're waiting for something else."

The market big boys began the week promisingly, with DFM Company and Dubai Islamic Bank adding 0.88 and 1.41 per cent respectively. This pair, together with Emaar, typically set the tone for the market, and so this may indicate Dubai will make further limited gains today.

Du and Emirates NBD also advanced, with the latter climbing 0.85 per cent, while the former was up 0.36 per cent.

"Over the past week, there has been a technical will to hold the index above 5,200 and this should remain robust, given that any nasty surprises in Emaar results have been ruled out," said Manibhandu.

He praised the banking sector's results as better than expected and said the release of Tamweel's Q2 figures later this week should help to pull up the market.

Manibhandu added: "First Gulf Bank and Abu Dhabi Commercial Bank have done well in terms of Q2 figures so we can expect much the same from Emirates NBD and DIB along with most other listed companies, but whether investors will respond is another matter. Many investors anticipate a rally in the fourth quarter, not the third."

Union Properties hastened its retreat, falling 1.12 per cent to Dh5.26 to take its losses to 4.9 per cent in the past three sessions. There was better news for Dubai's debutant, Takaful Emarat, which became the 61st company to list on the DFM. The Islamic insurer leaped 346 per cent to Dh4.46 as it claimed more than a quarter of the market's total turnover. Gainers edged losers 15:12.

"The market gave mixed signals," said Mohamed Alami, Naeem Shares and Bonds international desk manager.

"It started off bullish, but then retreated and seems to have bottomed out."

For Amjad Bakir, Mac Sharaf Securities trading manager, Dubai's most pressing task is to maintain above the crucial 5,200-mark, saying that if the index avoids falling through this floor, it could put on 300 to 400 points in the medium term.

"Second-quarter results are confirming that growth continues in the region despite a slowdown globally," Haissam Arabi, Shuaa Capital managing director of asset management, told Bloomberg.

This is "acting as a catalyst after the market was oversold last week."

Air Arabia jumped 3.92 per cent to Dh1.59 as falling oil prices helped reassure investors, while Gulf Navigation was another penny stock to prosper as it climbed 4.54 per cent to Dh1.61.

Foreign firms are net sellers

Foreign funds have continued their flight from the DFM and were net sellers of Dh200,000 of shares last week.

"This has been largely down to problems in other markets, but with the Dow (Jones Industrial Average, the benchmark US index) enjoying two positive days on Thursday and Friday, one can be hopeful of seeing a rally later this week," said Sanyalaksna Manibhandu, Emaar Saudi Financial Services head of research.

"But we have been saying that for the second half of last week and got it wrong, so I wouldn't be too bullish."

The DFM could rebound to between 5,400 and 5,500 points in the rest of July and the part of August, although it is likely to remain stuck around the 5,200-mark in the near term, he believes. "Foreigners should return as they see recovery in their own markets and profits in the GCC have been better than anywhere else in the world this year," said Manibhandu.

"In other markets, profits will be depressed by all sorts of problems which we simply don't have over here.

"Record oil revenues have increased spending power on both a retail and corporate level, while also providing liquidity for the financial system."