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06 December 2023

Late rally lifts Dubai index into positive territory

By Matt Smith

The Dubai bourse advanced for a second successive session following mega gains on the Saudi Tadawul the previous day.

But the Dubai Financial market put in a stuttering, uncertain performance before a late, late rally hauled it into positive territory. The DFM's General Index climbed 1.08 per cent to 1,489 points, its best one-day performance for nine sessions.

"There are expectations that Saudi's full-year numbers will be very poor, but investors believe these have now been more than priced in," said Julian Bruce, EFG-Hermes director of institutional equity sales.

"After being very weak for a number of sessions, it was inevitable the Tadawul would bounce back at some point."

Analysts say the historically volatile Saudi bourse surged on speculators' belief that 2008 will mark a low point for Saudi banks before they recover this quarter, prompting Dubai to attempt a similar revival yesterday.

"Until recently, the correlation between the Saudi and UAE markets was weak, but as local investors increasingly dominate GCC markets, Dubai couldn't ignore Saudi's move," said Bruce.

The latest gains were achieved on familiarly low volumes as 211 million shares worth a combined Dh216m changed hands. This would imply that last week's selling pressure is waning as buyers slowly return to the market, but with similar false dawns still vivid in investors' minds, few will be willing call the bottom just yet.

"At first glance it appears the UAE indices are stablising after taking a real battering recently," said Bruce. "It's fair to assume that the investors who deviated to Egypt and Qatar will return to the UAE markets, but there is still some residual selling going on."

Dubai's lenders were the most significant gainers, with Emirates NBD and Dubai Islamic Bank climbing 2.66 and 5.03 per cent respectively. The former's rise was based on just Dh50,044 of shares traded.

"The move by Emirates NBD hardly counts, but DIB saw quite heavy trading," said Bruce. "The latter tends to attract substantial speculators and with the market moving up, there were a fair few investors willing to buy the stock."

Meanwhile, Dubai's battered property sector also found some respite, with Emaar trading closing unchanged on Dh1.87 after moving within an eight per cent range.

Union Properties put on 1.75 per cent and Deyaar Development added 4.34 per cent as most Dubai stocks edged away from multi-year lows.

"Yes, the markets have hit a bit of an uptick, but there are plentiful stocks for sale in Dubai and most big names are struggling to make significant headway," said Bruce.

"However, if the index enjoys a few more sessions like yesterday, with positive performances by key stocks, it may tempt more investors back into the market," said Bruce.

Turnover is fourth lowest of 2009

Dubai's turnover of Dh234 million was the fourth lowest of 2009 and down eight per cent on Thursday.

Emaar was top trader in cash terms, with Dh68m, followed by DFM Company's 61m and Arabtec's Dh36m.

"Overall, the market was flat and the session was dull, with no fresh buying seen," said Shiv Prakash, a Mac Sharaf Securities technical analyst.

"Most of the stocks were facing selling pressure and were traded at their lower end."

DFM Company headed the losers' list after plunging 7.95 per cent to Dh0.81. The firm derives the majority of its revenues from trading on its own exchange and so with turnover slumping alarmingly along with its share price, investors are dumping the stock. Du also struggled, with the telecoms operator falling 2.7 per cent to Dh1.81. Gainers outnumbered losers 13 to eight.

"Foreign traders are pretty scarce right now after a rising outflow of overseas funds of late, but it's not just foreigners who are staying out of the market," said Julian Bruce, EFG-Hermes director of institutional equity sales. "Even at the height of Dubai's bull run in late 2007, foreign investors rarely accounted for more than a third of daily turnover and so all investor groups are largely avoiding the market at present."

Weak opening likely

The UAE stock markets are likely to be uneventful as trading continues to be stale.

"I think we will see a slowdown in selling pressure, with not so much foreign activity on the sell side, although one must take into account the Sunday factor, which sees Western markets closed," said Julian Bruce, EFG-Hermes director of institutional equity sales.

"The market should trade flat for the rest of the week. The markets will open weakly today, with uncertainty to the fore.

"Any uptick inevitably sparks some profit-taking."