Late rally helps Dubai bourse limit losses

A late, late recovery helped the Dubai bourse limit its losses to a further 50 points yesterday, but analysts warn this respite may be fleeting. The Dubai Financial Market General Index fell one per cent to 5,044 points and things could have been much worse after it dropped to an intraday low of 5,004 points.

"If one considers the pressure all Gulf stock markets are under severe selling pressure, then it would indicate that the factors driving this decline are not internal," said Wadah al-Taha, a senior financial analyst.

"The most likely cause is Iran's aggressive stance over its nuclear programme, which has struck fear into the market and caused negative reactions by the large Gulf investors."

The 5,000-mark proved to be a psychological prop for the DFM, supported in part by buying in Emaar.

The property developer, which accounts for almost a quarter of the DFMGI's weighting fell to Dh9.78 intraday, but rallied to finish on Dh9.90, which leaves it down 1.49 per cent and at a new 11-month low.

Emaar's 12-month low is Dh9.75 and it may test this today, having fallen to an intraday low of Dh9.78 yesterday.

Taha said: "Technically, Dubai is just 40 points from a psychologically important support at 5,000 points. There were signs of a potential recovery yesterday and it may rebound from around the 5,020 level, but Emaar is enduring heavy selling pressure at Dh9.90.

"There's no clear indication Emaar will rebound tomorrow and I can't say there's any real desire to accumulate at its current price."

The blue chips struggled yet again. As well as Emaar, DFM Company plunged another 5.83 per cent to Dh3.87, which is its lowest level since late October 2007 and almost half November's all-time high of Dh7.05.

Dubai Islamic Bank is another major in retreat, slipping 0.91 per cent to Dh7.60, while du returned to the red following Sunday's limited gain to fall 3.5 per cent to Dh5.30 and a new nine-month low.

Turnover reached Dh978 million, up by more than a quarter on the day before and an indication of rising selling pressure.

Emaar was the most active stock in volume and cash terms, seeing Dh350m of shares change hands, while Air Arabia was the second biggest heavy trader after 30.5m shares were sold. The budget carrier closed flat on Dh1.54.

DFM Company, Ajman Bank and Deyaar made up the rest of the volume top five. Deyaar was unchanged, while Ajman fell slightly.

Gulf General Investments beat a hasty retreat, dropping 5.66 per cent to Dh10, although it remains Dubai's best performer of 2008, having leaped 127 per cent this year.

Aramex is another in free fall, dropping 2.73 per cent to Dh2.14, which means it has fallen by a quarter in a little over two months.


Arabtec upturn

Losers out numbered gainers 19:4, and those stocks that closed in the green made largely inconsequential advances. Arabtec turned it around ater falling more than five per cent in early trading to close up 1.3 per cent at Dh15.65, while Union Properties ended a 14-session losing streak to climb 1.11 per cent.

Dubai Investments, up two fils, and Al Firdous, which saw just 5,560 shares traded were the two other gainers.

"Arabtec's advance was a good sign and shows the possibility of a rebound, but if selling pressure continues the market will fall below 5,000 points and the other gains were very minor," said Wadah al-Taha, a senior financial analyst.

Critical barrier

The DFM is now facing falling the 5,000-point barrier for the first time since late October, although yesterday's late rally does offer a glimmer of hope. However to mount a recovery the index will have to see turnover top Dh1 billion for at least three consecutive sessions, according to Wadah al-Taha, a senior financial analyst. He said: "If prices increase, but without volumes to support them, then this is not a real rebound and will not be sustained.

"The markets are negative despite positive company results.

"We have reached a very critical situation in Dubai and Abu Dhabi, which have both broken major supports. The leading and supporting stocks are enduring strong selling pressure and this will continue today."

DP World down

DP World could not escape the carnage and fell for the first time in four sessions. The ports operator dropped 4.82 per cent to $0.78 after 3.8m shares changed hands in 112 trades.

Depa was the only other active stock on the Dubai International Finance Exchange and it jumped 8.33 per cent to $1.30 following two transactions.