Foreign investors (FIs) were the main culprits behind yesterday's bear run on market streets, offloading shares to the tune of Dh403.74 million in the Dubai Financial Market (DFM), which accounted for 44.54 per cent of the stock market's total turnover of Dh728m.
The DFM general index tumbled 114.37 points yesterday, or 5.85 per cent, to close at 1839.10. FIs have now turned out to be net sellers in the past three sessions, recording total a offloading of Dh20.90m, Dh36.46m and Dh97.21m respectively.
"Foreign investors came in because of negative global cues. An overnight fall on Wall Street impacted trading sentiment. Adding to this was the drop in oil prices, which took its toll," Sanyalaksna Manibhandu, Research Head at Emaar Financial Services, told Emirates Business.
"The market witnessed more than two per cent gains early in Monday's session, but could not sustain it as retail investors and institutions preferred to sell. This volatility shows uncertainty in the market about its future direction," Manibhandu said.
Emaar, which has the highest weightage of 16.75 per cent in the DFM general index composition, fell 8.83 per cent yesterday alone. FIs' stake in Emaar has eased from 6.40 per cent on June 21 to 6.01 per cent at present.
Union Properties, in which FIs' stake has eased from 3.57 per cent to 3.36 per cent, fell 8.74 per cent yesterday.
Amjad Bakir, Trading Manager at MAC Sharaf Securities, said: "Foreign investors sold heavily today because of global negative factors. As expected, the market broke below the 1900 level and fell further to 1839 points. The next support level is 1720, but how strong this level will be is going to depend upon global cues and other fundamental factors. As long as oil prices keep going down and the dollar gets stronger, uncertainty is likely to continue.
"If oil prices go up to $69-$70, then we can expect a marginal rebound. However, the market is likely to move sideways," said Bakir.
After a decent rally of 28.57 per cent from May 25 to June 14, the DFM has witnessed a correction in the form of profit taking, pulling the index down 359.21 points to date, or 16.34 per cent.
Mathew Wakeman, Managing Director for Cash and Equity-linked Trading at EFG Hermes, said: "Our markets have retreated back to these levels because they were too expensive, it's as simple as that. The second-quarter results in the next month will tell us whether this pullback was correct or harsh, but what is certain is that the recovery story is still on and this is just part of our zig-zag trend."
Foreign investors' net investments were in the positive during the recent downward movement on the DFM from June14 to18, during which investors resorted to profit booking, taking the index down by 184.22 points or 9.14 per cent. FIs during the period bought Dh2827m worth of shares and sold Dh2711m, making them net investors at Dh116m.
Institutional investors' net investments during the same period, however, are in negative figures. They bought Dh1.45 billion worth of shares and sold shares totaling Dh1.65bn, resulting in a Dh198m negative investment, or offloading.
Banks and firms, among institutional investors, had resorted to heavy selling to the tune of Dh170m and Dh29m respectively.
Adverse news about Emaar, Shuaa and UP influenced the trading pattern in these stocks. The Dubai Banking Group's (DBG) refusal of Shuaa's offer to convert debt into equity took a toll on the latter's stock.
The exit of the UP CEO and an unclear deal between Emaar and Saudi's Kingdom Holding influenced trading sentiment in a negative way.
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