A sudden onset of selling pressure on bellwether Emaar at the end of yesterday's session dragged the Dubai Financial Market (DFM) down to close at 1640.63 points – a fall of 20.34 points, or 1.23 per cent.
At the beginning of the session, the DFM registered a jump to its resistance level of 1670 points and then faced profit booking amid strong speculative movements.
Emaar rallied to Dh3.32 during the first few minutes of trading yesterday and pushed the index higher, but it failed to continue the rally and faced quick profit booking. The stock continued to fluctuate in a narrow range for most of the session until the last 15 minutes of trading, when a sell-off appeared and dragged it to its lowest this week.
Selling pressures also came with increasing volumes, reflecting the fact that a lot of investors were cashing out of the stock.
Emaar dropped 4.28 per cent to Dh3.13, its lowest close so far this week. The stock dominated 47 per cent of the total trade value in the market yesterday.
This movement came amid news that Emaar was planning to sell its controlling stake in Singapore retailer RSH Holdings.
Also, rumours increased in the market about Emaar's fourth quarter results and for the full year 2009. The company is expected to announce its results very soon, maybe over the weekend. These rumours were creating fluctuations in the stock and uncertainty among investors.
Other real estate and construction stocks moved in a narrow range with limited gains or losses, except DSI, which went down 3.37 per cent to close at Dh0.86.
DIB reversed its upward trend and went down slightly yesterday to close at Dh2.32 amid relatively active trading on the stock.
The bank has postponed to this morning its board of directors' meeting, which was to be held yesterday. Rumours also increased about the bank's results for 2009.
The other banking heavyweight, EmiratesNBD, reversed its direction and advanced 1.6 per cent to Dh2.56. The bank is expected to announce its results today, the lead up to which increased rumours about the stock and attracted speculators.
"The market is dominated by speculators who focus on rumours or follow-up movements in global markets," said Humam Al Shamaa, Financial Consultant of Al Fajr Securities. "There are sharp fluctuations in the index due to quick movements by speculators while major players are still out of the market. All market participants are awaiting the results of leading companies, which will decide the trend in the DFM. Meanwhile, speculators are moving very fast during intraday trading based on a fear of surprises."
Abdel Hakim Jamil, Financial Analyst at Brouge Securities, said the current focus on 2009 results has led to a reduced correlation with global markets.
"The impact of movements in global markets has reached very low levels. The main focus is on the earnings of leading stocks, amid increasing rumours and expectations of surprises in their results, both in the positive and negative directions," he said.
"There is increasing uncertainty and confusion among investors, as a result of which they have remained on the sidelines along with the institutions. There are some information leakages and rumours that are plaguing the DFM for the past few weeks and speculators have become extremely cautious."
The DFM's turnover advanced yesterday, with 186.6 million shares worth Dh338.7 million changing hands. Emaar was the leading active stock while DFM and DIB attracted good interest.
"The turnover is still weak and the current increase has came from speculators who were turning over the same liquidity several times during the session. This does not reflect the real situation," Al Shamaa said.
National Cement Company the top gainer
The National Cement Company was the top gainer on the DFM yesterday after it announced plans to distribute cash dividends of 45 per cent, or Dh0.45, per share. The stock added 4.66 per cent to close at Dh3.37.
However, the rally in NCC came on low turnover. NCC's general assembly meeting will be held on March 10 to approve the cash dividends, according to a statement on the DFM.
Shareholders registered on the DFM on March 21 are eligible for the cash dividends.
Shuaa Capital fluctuated sharply yesterday, moving between Dh1.21 and Dh1.30 before ending the session slightly down at Dh1.25.
The turnover on the stock remained low during these movements. Shuaa Capital's board of directors has accepted the resignation of Abdul Rahman Al Saleh from the board.
It said that the board will appoint a new member and the appointment will be presented to the general assembly meeting in April.
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