Today's trading on the UAE stock markets will determine if yesterday's technical bounce turns into a positive medium-term trend, analysts said. Essential to such a turnaround is the ability of the two indices to rise for two consecutive trading sessions and institutional investors to play a larger role, they said.

Increasing turnover yesterday showed there is huge liquidity in the hands of individual investors, but they are still waiting for a clear signal that the market has bottomed out and is ready to change course upwards.

Small and short-term investors have continued to dominate movements in the market in the past two weeks. However, analysts said this situation will not continue for a long time, citing increasing signals that major players are returning to the market. In the last two sessions, most brokerage firms were advising their customers to buy leading stocks in the market. The result of this advice was clear when Emaar's stock broke through the Dh9 level.

 

Ziad Dabbas

Ziad Dabbas, financial consultant at the National Bank of Abu Dhabi, predicted that the DFM would change its long-term direction very soon because the index has already reached very low levels. "We expect the rebound will continue at least today, and this will change the general sentiment among investors to the positive side.

"There is no realistic or logical factor behind the decline in the past four weeks. There is a consensus among all brokers, speculators and investors that the market is oversold," said Dabbas.

"Stock prices have reached very low levels and there is huge liquidity outside the market. This money should start entering the market now because many stocks are giving signals that they will be appreciating very soon," he said.

Fadi Al Said

Fadi Al Said, head of equities at ING Investment Management Middle East, said the rebound has to continue for several sessions to consolidate the market.

"The market is still unstable and needs the rebound to continue for several sessions. The DFM is still in the downturn trend and the current rebound can be a fake one if it fails to hold today.

"The stock market needs stability for several sessions to be able to formulate a bottom; it needs a base to start an upward trend. This is still missing in the market," Al Said said.

Mohamad Al Beheiri

Mohamad Al Beheiri, head of trading at Amana Financial Services, voiced concerns over the sharp fluctuations in the DFM index in the past two sessions.

"The index moved around 200 points, downwards and up, within one hour in yesterday's session. This is very worrying in assessing the current rebound. There were rapid increases in the prices of leading stocks and there were a lot of gaps among different levels. This will affect the ability of the rebound to survive for a long time," Al Beheiri said.

He felt the rebound had exceeded all expectations, but still fell short of achieving a change in the market's direction. "The market should move sideways after this rebound to achieve stability in the index," he said.

Abdul Hakim Jamil

Abdul Hakim Jamil, financial analyst at Borouj Securities and Bonds, was hopeful that the market rebound would continue until the beginning of September.

"The increasing turnover yesterday showed that liquidity can return at any time to the market, but this depends on the sentiment and psychology of investors. The rebound created some satisfaction among investors, as they were able to regain part of their losses. We hope this positive sentiment will continue," he said.

Rami Samy

Rami Samy, deputy sales manager at EFG Hermes, felt the market was still in the grip of a downturn trend despite yesterday's rebound.

"The DFM index dropped sharply during the previous few sessions and the rebound was a natural reaction to this. The general trend is still downwards – until the market can give strong signals that it is changing direction," he said.

Hosam Al Husseini

Hosam Al Husseini, head of brokerage at Emaar Financial Services, said there two possible directions the DFM could take during the next few sessions.

"The index may continue the rebound today and then stabilise in the next few sessions. This will be a significant indicator that the market is going to formulate its bottom," said Husseini.

"The other expectation is that the market will not be able to continue the rebound and decline to the levels we saw in Monday's session. This will give indicators that the fluctuation will continue for some time," he said.

However, Husseini still felt that the market's bottom was very close, and would probably come within the first two weeks of September.

Motaz Al Demerdash

Motaz Al Demerdash, CEO of Sharjah Islamic Services, expected liquidity to continue increasing in the DFM in the next few sessions.

"We noticed new liquidity entering the market in yesterday's session. Investors were willing to buy and the prices were increasing very fast," he said.

"The rebound in the market will depend on the amount of new liquidity entering it during the next few sessions.

"But the sharp decline and rebound during the last two sessions has not indicated that this rebound will be able to survive for a long time.

"The first week of September will be critical to determine the direction of the market, as increasing numbers of investors are returning and this will create more buy bids," he said.

Chamel Fahmy, senior regional sales trader at Beltone Securities Brokerage, said: "I think we are near the bottom," as reported by Bloomberg . "The selling pressure is mainly from foreign initiations which are planning to shift liquidity to Saudi Arabia's market."

"Emaar is extremely cheap. It is a must buy at these levels for any long term investor." Emaar climbed 1.8 percent to Dh9.16. The stock yesterday closed at its lowest since April 2005. The stock on August 26 was valued at 8.26 times its earnings, the cheapest on record.