Limited ADX losses hint at reversal of market trend

The Abu Dhabi Securities Exchange (ADX) is projected to rebound within the next few sessions, despite the long-term trend still being on the down side.

The market ended yesterday with limited losses of 5.82 points and closed at 4359.66 points. The turnover increased, as 150 million shares changed hands at a total value of Dh 728.1m.

Sorouh, Aldar, FGB and Dana Gas stocks continued to dominate trading in the market. Leading stocks in the banking, communications and real estate sectors succeeded in holding the index from further losses.

Fadi Al Said, head of equities at ING Investment Management Middle East, said the ADX was still experiencing a downturn trend and this might continue until the index reaches its next support level at 4300.

"We expect the market to rebound soon and it may surge to 4500 points. The ADX is less exposed to foreign investment with leading stocks owned by government institutions. This is holding the index and preventing sharp fluctuations in the market."

Mohamad Al Beheiri of Amana Financial Services said the real estate sector continued to dominate trading at the ADX, with Aldar and Sorouh being the most active stocks.

"The market is expected to continue in the downturn trend until it gives strong signals that it is changing direction. However, it is expected to rebound after the sharp declines during the last two weeks," Al Beheiri said.

"Turnover is increasing at the ADX but at a slow pace and this is giving negative indicators about the long-term trend in the market. There is lot of liquidity outside the market waiting for proper chances and investors are still reluctant to enter again.

"The ADX has already examined its support level of 4300 points during intra-day trading and the next few sessions will be critical to determine the market's direction – whether it will continue the downtrend to lower support levels or it can change its direction to the upward side," said Al Beheiri.

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