UAE markets end flat after making early gains

The UAE markets held steady yesterday after failing to hold onto early gains. This slump will worry some brokers, with investors lacking sufficient confidence to claw back Sunday's surprise losses. Instead, both indices closed virtually unchanged, with the Dubai Financial Market edging up 0.03 per cent to 5,795 points, while the Abu Dhabi Securities Index slipped 0.07 per cent to 5,108. "The market was very flat yesterday, but most brokers anticipate a rally in the latter part of June as investors get ready for the second quarter results," said Sherif Abdul Khalek, Beltone Financial Institutional Trading Manager. "We usually see a spike in activity around that time as investors try to make some profit before their summer holidays." Another concern will be the falling volumes. During last week's mini rally when both markets gained more than two per cent, combined daily average trading reached 879 million shares, but this figure has fallen to 644 million this week, a drop of 27 per cent. Similarly, average combined turnover has declined by 22 per cent over the same period. "Local institutions have slowed down which has led to an overall fall in volumes, but it's a good sign there's little pressure from the sell side. This shows high-net worth and institutional investors are not willing to offloat at current prices." The latter point offers a vote of confidence in a market, so the feared descent to 5,600 points is looking less plausible. Dubai's blue chips struggled to make headway, with Emaar and Emirates NBD closing unchanged, while DFM Company and Dubai Islamic Bank fell 0.17 and 0.54 per cent respectively. Du escaped the gloom to add one per cent. Due to lazy heavyweights, investors again focused on Dubai Investments together with the more active penny stocks. DIC was the top trader, claiming 42 per cent of the DFM's volume to climb 0.7 per cent to Dh4.27. The company is among Dubai's best performers of late. "There's no official news from the company, but everybody is talking about an increased flow coming from local funds and high-net worth investors," said Khalek. "DIC hit a low of around Dh3.80 at the time of its recent rights issue. This price was considered fundamentally cheap and so it has since been moving up on high volumes. This is probably based on speculation over second quarter results." Air Arabia saw heavy selling to push it down 0.5 per cent to Dh1.96, perhaps amid that soaring jet fuel prices will plunge the airline industry into the red this year. Deyaar climbed 0.44 per cent to Dh2.27, although it has been virtually unchanged since late March. Shuaa Capital slipped 0.82 per cent to Dh8.39. Arabtec reached a new record close of Dh16.80 after adding 0.6 per cent. Small stock rise at ADX The capital's gainers chart was once again the preserve of small cap stocks such as Fujairah Building Industries and National Marine Dredging Company, which surged 6.47 and 4.48 per cent, respectively. The latter is often a good hedge for investors because it is unrelated to the dominant real estate and banking sectors and so usually moves independent of the market. NMDC has jumped 55 per cent in the past month, while the Abu Dhabi Securities Exchange has added 1.5 per cent over the same period. Some of the ADX's lesser known banks grabbed the limelight, with heavy trading in Sharjah Islamic Bank, the capital's most active stock, and Commercial Bank International. This did little for their respective share prices. The CBI was unchanged and SIB lost 0.95 per cent to squander most of Sunday's gains. The latter bought a 10 per cent stake in Oman property firm Majan Development in late May, while on Sunday the UAE Central Bank announced Islamic banks could borrow up to $200 million (Dh734m) per day against their certificate of deposits. Arkan resumed its ascent, adding 1.8 per cent to Dh6.26. The heavyweights remained stable, with etisalat and National Bank of Abu Dhabi falling by less than one per cent, while Aldar, First Gulf Bank and Abu Dhabi Commercial Bank increased by a similar margin. A busy week ahead Trading is predicted to rise tomorrow and Thursday as institutional investors return in numbers. "The Dubai index could move up half a percentage point," said Sherif Abdul Khalek, Beltone Financial Institutional Trading Manager. "It might test 5,850 although I doubt it can break this immediately. Next week it will have a better chance of doing so." The Abu Dhabi bourse looks better from a technical point of view because it's above its closest resistance level, which is at 5,100 points. "The capital can move up another two per cent or so to get within sight of the 5,300 mark," added Khalek.