The Dubai bourse made it six gains in a row yesterday, while the Abu Dhabi Securities Market returned to winning ways.
After stalling on Monday, the Dubai Financial Market General Index rediscovered its verve to climb 0.99 per cent to 5,777 points, its highest close since March 6.
“The market is showing signs of strength,” said Mohamed Alami, Naeem Shares and Bonds international desk manager.
“In the medium term the outlook hasn’t changed because it’s always been positive, but short-term trading has improved markedly and that has a lot to do with first quarter results.”
Three of Dubai’s top five gainers – Arabtec, Amlak and the Dubai Financial Market – claimed a combined turnover of Dh900 million, which represents 35 per cent of the Dh2.55 billion market total. They also accounted for a third of all shares traded.
Of this trio, Arabtec was the star, surging 5.05 per cent to yet another record high of Dh15.60, while the DFM and Amlak added 2.81 and 3.53 per cent, respectively.
Amlak fell just short of its stubborn Dh5 resistance level, although it should break this today, analysts say.
The DFM also faced a critical test at Dh5.80, but mega buying helped it overcome this figure.
“The Dubai rally is technically driven after the market broke 5,750,” said Sherif Abdul Khalek, Al Futtaim HC Securities dealing room manager.
“On Monday, the index slowed down because investors were afraid of profit taking, but they were reassured by the strong close that day, which showed accumulation.
“This continued in early trading yesterday with all kinds of investors active on the buy side, from foreign and local funds to retail investors and high net worth individuals. Everybody is becoming more confident, especially the small investors.”
The main market mover, however, was Emaar, which at last seems to be benefitting from a procession of upbeat broker reports, and the property developer increased by 2.58 per cent to Dh11.90, its highest finish for more than a month.
Emaar has now finished in the green for four sessions running, but remains one of the UAE’s worst performing stock in 2008, having seen its value slump by a fifth since the turn of the year.
However, as one of the most liquid yet undervalued stocks on the market, Emaar is expected to be one of the main beneficiaries of the return of foreign institutional money.
Al Futtaim’s Khalek said: “The final hour’s trading saw a heavy flow come into Dubai and particularly into Emaar. There was no specific reason for this move, but as the largest cap company on the DFMGI it’s bound to attract some of this flow.
“Dubai is moving more aggressively because its stocks are more open to foreigners, but Abu Dhabi will follow the same trend in the long run,” said Khalek.
The Dubai bourse now has 6,000 points in its sights and it was around this mark that it suffered a major correction in January, so investors will be wary of history repeating itself. However, the previous collapse was largely the fault of global market turmoil and with first quarter results largely exceeding expectations, Dubai should avoid the same fate this time around.
Banking shines at ADSM
The ADSM was sedate in comparison to Dubai, although turnover again topped Dh1bn as banking stole the limelight away from real estate.
Abu Dhabi Commercial Bank saw Dh409 million of shares changing hands, which is more than a third of the market total, after it announced a generous dividend together with the imminent sale of a Dh4.8bn convertible bond. This money will be used to buy a 25 per cent stake in RHB Capital, Malaysia’s fourth largest bank. ADCB jumped 6.36 per cent to Dh7.19.
“Most of ADCB’s volume was bought in the first five minutes of trading, either by a high net worth individual or a fund,” said Mohamed Alami, Naeem Shares and Bonds international desk manager.
ADCB has been in the doldrums since last July, but brokers believe consolidation phase could be about to end, particularly with foreign funds targeting the capital’s banking sector.
Alami said: “Abu Dhabi is as solid as Dubai in terms of fundamentals and so there’s a chance to make big returns in the short term. It’s not that the ADSM is better than Dubai, but simply that it’s lagging behind.
“There’s no hard and fast rule as to which market should follow the other. The focus shifts from one to the other and rarely do they move up simultaneously.
“Of course both exchanges can fall together because they don’t need volumes to decline.”
Abu Dhabi National Energy Company – better known as Taqa – climbed 1.78 per cent after revealing it was expected to replace a $3.1bn (Dh11.38bn) credit facility with low cost yen-denominated loans.
Arkan fell as predicted, dropping 0.21 per cent, despite being the second most active stock. Sorouh and Aldar also retreated, losing 0.44 and 1.01 per cent respectively.
“The ADSM is looking very bullish, it just doesn’t yet have the volumes to make a major move upwards. It is continuing to consolidate very strongly within its highly traded
stocks such as Sorouh and Aldar. It’s a matter of time before Aldar takes off,” added Alami.
DFM index faces strong resistance
The Dubai Financial Market General Index will encounter strong resistance at 5,850 points, with brokers not expecting it to clear this hurdle at the first attempt.
The market is expected to correct instead, before consolidating and mounting a second charge.
From there, the index will be wide open until 5,950 and so could be within touching distance of the 6,000 level before the end of April.
Mohamed Alami, Naeem Shares and Bonds international desk manager, said: “If Emaar continues to perform the index can reach these levels without much trouble. Emaar breached a major obstacle at Dh11.60 and the next challenge will be Dh12 and then Dh12.40.”
Sherif Abdul Khalek, Al Futtaim HC Securities dealing room manager, agreed, saying Dh12 would be a tough mark to break, yet Emaar should overcome this today providing volumes match Tuesday’s.
Emaar volumes over the past two sessions have been markedly higher than its 30-day moving average, another sign that the developer may at last be heading north.
“The negative news surrounding Emaar, such as its first quarter negative growth in profits, have already been priced into its stock price, so I’m expecting its shares to move up for this quarter at least,”
“The market’s uptrend has started with several stocks such as the DFM, Emaar, Tamweel and Amlak and should now spread to others, particularly the likes of Dubai Investments and Air Arabia,”
Alami believes the market rally will continue for a minimum of two weeks, although it will correct along the way.
DFM shows signs of vigour with six gains in a row