Property stocks propel DFM towards 2400 level

The Dubai Financial Market, led by Emaar and other property stocks, yesterday broke through the critical 2100-point mark – raising hopes of a further rally towards 2400.

The general index added 4.75 per cent to each 2198.31 points, its highest close since November 12, 2008. This represented a net gain of 99.59 points over the previous close of 2098.72.

"I see three reasons for this surge," Sanyalaksna Manibhandu, Research Head at Emaar Financial Services, told Emirates Business.

"The major reason was Emaar's success in winning a prestigious contract, the second reason was the oil price hovering at $72 per barrel and the third was the fact that it was Sunday, when other global markets are closed. A rise of more than seven per cent rise by a heavyweight like Emaar will naturally take the index higher."

The index topped the 2100 level last Monday before witnessing profit booking. The market later returned to an upward trend.

The realty index, with a gain of more than six per cent, was yesterday's major gainer among the indices on the bourse followed by utilities, investment and banking.

"We met our estimated target of 2140 for the DFM general index, which was predicted in March in our forecast report," said Shiv Prakash, a technical analyst at Mac Capital. "We have seen a rise of 700 points on the index from 1500 levels and the bullishness remains intact as the market is trading well above the 14-day moving average.

"In the last fall from the 2100 resistance level the market took good support at 1950 and showed another bounce, which looks set to continue further until 2400-2500 in the coming sessions."

Emaar soared 7.17 per cent to Dh4.18 after winning SR100 billion (Dh99.8bn) contract from Saudi Kingdom Holding Company. Emaar is the developer of the Burj Dubai, which is at present the tallest man-made structure on the earth. As part of the new contract Emaar will construct the building that will take the Burj's title as the world's highest – Kingdom Tower, which will rise 1km in Jeddah.

"Emaar's surge has given a clear breakout on the sideways direction and indicates another bullish rally to Dh5 in the short term," added Prakash.

"ENBD was on upper limits at Dh4.12 and looks set to see Dh6 in the coming sessions. Ajman Bank gave a rise of 10.25 per cent and closed at Dh1.29. The stock will now touch the next higher targets of Dh1.45 in the coming days. Dar Takaful, Gulf Navigation, Deyaar and Tabreed also witnessed good bullish moves."

The DFM's previous high was 2214.80 points, which it reached on November 12. The index slipped below the 2000 mark later that month and has since continued to trade below 2000 for more than six months before breaking through that level on June 4.

On May 31 the index, buoyed by HSBC's bullish report on the UAE property sector, rose 4.8 per cent and registered its largest one-day gain during the past 14 weeks and highest close since December 18. On the same day the volume of 1.2 billion shares soared to an 11-month high.

Emaar enjoys the highest weightage of 16.75 per cent in the general index's composition and influences the market's movements more than any other stock. On June 2, the DFM rose 7.1 per cent as Emaar surged eight per cent.

The market is moving mostly on news flow rather than fundamentals and as a result the trading pattern is likely to be volatile and choppy. However, increasing trading value is indicating renewed interest from retail investors.

The general index opened on a higher note above 2,100 points and continued to rise further, reaching a high for the day of 2,199.41 points.

Stocks such as Emaar, DIC, DFM, ENBD, Deyaar, Arabtec and IAIC still top the analysts' bullish charts.

"Resistance attracts some selling, but then on lower levels fresh buying makes markets to pick up again and it closes on a new high," said Prakash.

"Intraday markets opened higher with a gap and continued bullish until 2200 levels later closed at 2198.31 up by 4.75 per cent. The rally will continue higher if remains above the 2,000 support levels."

Trading turnover soars to dh2.47bn

The DFM recorded another heavy session as the trading value jumped to Dh2.47bn amid buying interest across several counters.

More than 1.56 billion shares were traded in 22,985 transactions as 29 stocks were traded.

Mirroring the upbeat mood among retail and institutional investors, 25 stocks advanced, three declined and one remained unchanged.

Manibhandu of Emaar Financial Services said: "The rising value and volume on the bourse clearly signal increasing interest of retail investors and institutional investors as well. However, after witnessing the decent gains, profit taking is expected anytime as investors who are waiting for better prices may come back any moment. Heavy profit taking may happen before the end of this month."

 

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