Global crash takes a toll on local stocks

The Dubai Financial Market (DFM) suffered a major setback yesterday as selling across the board on the back of the Greek debt-induced weekend carnage in US markets pushed the index lower.

Saturday's fall of more than four per cent in the Saudi Arabian market, coupled with weak global cues, took a toll on the DFM and all the traded market heavyweights closed in the red.

With speculative trading and the absence of fresh buying support, the DFM general index fell for the third session in a row. Twenty-one out of the 26 traded scrips closed lower and three advanced, while two remained at their previous levels.

The DFM index registered a net fall of 20.95 points to end the session at 1712.90 points, 1.21 per cent lower than the previous weekend's close of 1733.85 points.

Robert McKinnon, Chief Investment Officer at ASAS Capital, told Emirates Business: "The main reason for the market's fall was global cues, which triggered the selloff. However, the DFM rebounded in the second half as market players were waiting for Arabtec's results. The anticipation that global markets were in oversold positions was also another major reason for the late rebound on the DFM." Adverse conditions in global markets dampened the trading sentiment, as no stock showed signs of moving upwards during the session. The market opened 74 points lower over panic selling.

At one point of time, the index fell 3.95 per cent to 1665.32 points, with all traded stocks moving lower. Trading value was minimal at Dh91 million in the first 30 minutes of trading. Emaar, Arabtec, DFM, Air Arabia, DIB and DSI were the top losers of the day.

At 11.15am, the index recovered marginally and was trading 3.24 per cent lower at 1677.61 points on a Dh162m turnover. With no stock gaining, 23 stocks were trading lower and one flat.

The DFM index was hovering in a narrow range of 22 points until 3pm and then staged a recovery that took it to 1712.90 points – the session's high – which also indicated an undercurrent of strength in the market.

Equities recovered marginally to 1689 points on a technical rebound, with the index trading 2.57 per cent lower at 1pm on a Dh292m trading value. All 25 stocks were trading in the red. The lack of an intra-session gainer clearly indicates the level of confusion and panic among market players during the first half of trading.

Air Arabia's shares came under pressure after the announcement of its first quarter results. The Sharjah-based budget carrier posted a 51 per cent drop in its first quarter net profit.

The Air Arabia stock dropped 3.40 per cent and closed at Dh0.908.

Market bellwether Emaar fell 1.04 per cent and closed at Dh3.81, while Emirates NBD shares eased 1.67 per cent to close at Dh2.95. Arabtec shares shed 1.60 per cent to end at Dh2.46 ahead of the board meeting to approve its first quarter results.

Meanwhile, the DFM resumed trading in the National Industries Group stock after its disclosed the resolutions of its AGM and board meeting held on May 06, while the exchange suspended trading in Ajman Bank from 10am yesterday. Trading in Ajman Bank shares will resume once its results are disclosed.

Drake and Scull International informed the stock exchange that its board meeting would be held on Tuesday to approve the first quarter results and update on acquisitions.

The board meeting will also review and approve minutes of the previous board meeting.

All eyes on wall street

After beginning with a bout of turbulent trading, market players at the DFM turned towards the first session of this week on global markets, which was to set the tone for the next level of trading.

However, encouraging US job data failed to ease a panic situation on the bourse. "What we saw today is only a corrective bounce. We may again see some pressure depending upon Monday's trading on global markets," said Shiv Prakash, an Equity Investment Analyst (Technical) at MAC Capital Advisors.

"The closing at 1713 points is positive for the market, which is expected to touch 1750 points soon, putting 1800 in sight. This is because the rise in trading value lifted the index upwards as the most of the Dh432m trading value was recorded in the rebound wave," said Wadah Al Taha, a senior financial analyst.

Bucking the trend

Takaful Emarat, Dartakaful and Al Salam Bank Bahrain stocks bucked the trend to become the only three stocks that closed

higher among the 26 traded scrips on the DFM yesterday.

Dubai Islamic Bank and Gulf Navigation closed flat. While most of the session saw no gainers, at the closing Takaful Emarat, Dartakaful and Al Salam Bahrain turned out to be the stars on the exchange. "The trading pattern clearly reflects hesitation about what's happening, and [concern at] the more than four per cent fall on Saturday in the Saudi market. The index broke many support levels," said Wadah Al Taha, a senior analyst.