DFM recovers marginally in second half

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The selling spree on the Dubai Financial Market continued yesterday, pushing the general index down by a further 5.61 per cent.

All the sub-indices with the exception of transport closed lower as the general index lost 108.88 points to close at 1,831.48 compared with 1,940.36 the previous day.

"The market is still weak," Taimur Saadat, a senior technical analyst at Arab Capital Markets Resource Centre, told Emirates Business. "Another major reason for the steep fall is the fallout from the rally that took place over the past four months. The market was waiting for a correction and the Dubai World issue erupted and became the trigger for a meltdown."

After Monday, DFM opened on a weak note 122 points lower and moved in a restricted range as the market reeled under selling pressure. The index fell 6.69 per cent to 1,810.53 - which remained the day's low - at 11.45am on panic selling. Later it gradually recovered to touch 1,833.06, the session's high, before closing at 1831.48.

"The market recovered marginally in the second half of the session as there was renewed hope among investors that the UAE Government would take steps to ease the present turmoil," said Saadat.

The second half of the session saw Aramex and Air Arabia advance and both closed higher. Air Arabia rose 2.13 per cent and closed at Dh0.96 while Aramex moved up 2.53 per cent to close at Dh1.62.

Air Arabia topped the list of major volume and value churners on the bourse, achieving turnover of Dh76 million and volume of 85 million shares. More than 23 million Aramex shares worth Dh34.43m were traded. The other major volume pushers were DSI, Deyaar and DFM.

DSI recorded a volume of 84 million shares while Deyaar clocked 24 million shares, Aramex 23 million and DFM 19 million. These stocks recorded trading turnover figures of Dh76m, Dh70m, Dh60m, Dh34mn and Dh34m respectively.

The day's biggest losers were Emaar, Shuaa Capital, Arabtec, DFM and Union Properties (UP). Emaar fell 9.87 per cent and closed at Dh3.38. Shuaa Capital fell 9.8 per cent to Dh1.38, Arabtec eased 9.75 per cent to Dh2.50, DFM fell 9.69 per cent to Dh1.77 and UP fell 9.64 per cent to Dh0.74. Mirroring the market's overall decline, 22 stocks fell and two remained unchanged.

The DFM had witnessed a heavy crash on Monday following the negative coverage of the Dubai World debt issue, which resulted in panic selling by foreign investors that pushed the index down 7.3 per cent.

"Most fund managers and other institutional investors just tried to dump shares following the latest developments in Dubai," said Saadat. "It's not because companies are doing badly, it's an unwanted phenomenon that resulted in panic selling. It's a natural that a recovery takes place after a heavy selling binge."

The DFM website said the exchange recorded insider trading in Aramex and DSI. Aramex witnessed two buy orders and three sell orders. Buy orders to the tune of 49,835 shares at a price of Dh1.43 were recorded in Aramex, while sell orders for 24,835 shares at Dh1.49 and another sell order for 25,000 shares at Dh1.62 were seen on the bourse.

The insider trading in DSI involved three buy orders at Dh0.82 per share, amounting to a combined figure of two million shares.

After the bleak turnover on Monday, volumes on the DFM recovered yesterday. The bourse registered trading turnover of Dh403.62m compared with Dh37.5m on Monday - the lowest turnover since June 23, 2007.

"After the holidays we can expect large volumes on the market," said Saadat. "Retail investors and most of the fund managers will be back trading after the National Day holiday."

The DFM recorded volume of more than 366 million shares in 5,192 transactions involving 26 stocks. Market analysts are expecting to see a recovery after a further fall to the 1,800-point level.

"The market is expected to touch 1,800 or lower and once it reaches this crucial mark it may bounce back," said Saadat.


DP World rebounds on reassurances

DP World, a subsidiary of Dubai World, staged a recovery on Nasdaq Dubai yesterday as it rose 4.92 per cent and traded at $0.384 following the assurances from His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai.

Sheikh Mohammed said the emirate was strong and persistent despite the global reaction to its plans to restructure Dubai World. Responding to the global reaction to the conglomerate's restructuring plan, he said: "They don't understand anything."

Earlier in the day the President His Highness Sheikh Khalifa bin Zayed Al Nahyan, Ruler of Abu Dhabi, said the national economy was showing signs of gradual growth in the fourth quarter. The country would not slip due the global financial crisis, he added.

The rulers' positive remarks brought a sigh of relief to the markets. DP World fell 14.9 per cent on Monday and closed at $0.37 after facing selling pressure.

© Emirates Business 24/7 2009