Heavy buying pushes UAE markets into the green

The Dubai Financial Market (DFM) surged 130 points yesterday after turnover increased by more than three-quarters on the day before, while Abu Dhabi made its first gains of the month.

After a torrid start to August that saw the two domestic markets lose more than 1,000 points combined, many analysts were braced for further declines yesterday, but heavy buying instead pushed them into the green.

The DFM’s General Index surged 2.63 per cent to 5,074 points, its second-best one-day gain in six months, while the Abu Dhabi Securities Exchange (ADX) climbed 1.61 per cent to 4,463 points.

“It was not the level of the index that triggered yesterday’s rebound but a decision by funds to move in a big way,” said Ayman El Saheb, Darahem Financial Brokerage director of operations.

“It was clear the majority of small investors were waiting for Dubai to fall to 4,800 points and the funds and high net worth players didn’t want retail to buy before them and so they jumped the gun.”

But amid the optimism of yesterday’s resurgence, it is important to remember that yesterday’s closing figures mean that Dubai is still below Sunday’s finish, while Abu Dhabi lags its Monday’s close.

“We’re not out of the woods yet and some profit taking is expected today,” said Saheb.

“The index needs to at least hold around its current level today and then advance in the following few sessions to be certain we’re entered a new trend upwards.

“If yesterday’s gains are lost over the course of the next three sessions, then Dubai is definitely heading to 4,800 because this would give a clear indication that people have no trust in the market.”

Dubai turnover soared to Dh1.45 billion, the highest total for three weeks, while analysts say trading must comfortably top Dh1bn for at least three consecutive sessions for the market to convincingly recover.

“From yesterday’s turnover it’s obvious that it wasn’t retail but institutions that were the buyers. The institutions bought from retail investors and pushed prices up.”

Trading in the capital was more modest with Dh820 million of shares changing hands, still some way short of the mega volumes of June and early July when speculators pumped money into small cap ADX stocks.

On the DFM, gainers outnumbered losers 26:1, with the blue chips among the biggest movers. DFM Company and du surged 6.31 and 2.76 per cent respectively, while Dubai Islamic Bank, which sunk to a 12-month low on Tuesday, edged up 1.46 per cent to Dh7.60.

 

EIGHT ADVANCE ON ADX

Eight of the nine largest companies on the ADX advanced yesterday.

Aldar Properties was the notable exception, falling 2.1 per cent to Dh9.79. The beleaguered developer’s turnover was Dh447m, which is 55 per cent of the index total. Rival Sorouh Real Estate added a modest 0.66 per cent to suggest that doubts over the UAE property sector are far from resolved.

“Abu Dhabi will rally, but it usually lags Dubai,” said Ayman El Saheb, Darahem Financial Brokerage director of operations. “If the latter slows down then investors may switch back to the capital.”

First Gulf bank was the most significant gainer, surging 7.2 per cent to Dh21.60.

 

EMAAR HELPS DFM RECOVER

Emaar was the driver of Dubai’s recovery, with yesterday’s 52-week intraday low of Dh9.54 signalling the apparent bottom of the market.

The property developer added 2.5 per cent to end on Dh9.84, having fallen from a session-best of Dh9.90. Brokers have previously reported big sell orders at the latter price and so it is difficult to say whether Emaar can make further gains today.

“Emaar saw buying from Dh9.90 down to Dh9.54 – investors know you only see Emaar at these prices once a year and so it was very tempting,” said Ayman El Saheb, Darahem Financial Brokerage director of operations. “Once investors started buying into Emaar they started acquiring DFM Company as well. This pair is the engine of the market and so sparked yesterday’s rebound.”

Investors seem to have realised that the sell off in real estate-related stocks was exaggerated, with the market obeying the age-old maxim that trading is dictated by fear and greed.

Mortgage providers Tamweel and Amlak Finance climbed 9.83 and 5.8 per cent respectively, while construction giant Arabtec added a modest 0.3 per cent.

Saheb said: “Air Arabia, up 6.6 per cent, Ajman Bank, up a near maximum 14.8 per cent, and Emaar were Dubai’s top three traders, followed by DFM Co and Tamweel.

Dubai is able to rebound faster than Abu Dhabi because it has a greater variety of stocks.