UAE may be a right candidate to find a seat in the emerging markets club, which the market missed this time around along with Qatar. These two markets have implemented delivery-versus-payment (DvP), a program for completing stock transactions which is believed to help lift their chances when MSCI takes stock of the situation again in December.
There are brokers and institutions that earnestly believe that though Dubai Financial Market (DFM) has made great strides towards achieving market maturity in the last few years, the lack of activity in most shares listed on DFM needs to improve a lot though this may not be a condition for clinching the emerging market ticket. The trading statistics for March 2011, released by DFM show that the market activity is simply driven by just five companies, viz, Emaar Properties, ARTC, Air Arabia and Drake & Scull International (DSI).
Emaar Properties and ARTC together accounted for more than 55 per cent of the total traded value on DFM in the month, with the trading in these companies valuing at Dh1.710 billion and Dh1.161 billion respectively. The five companies together accounted for close to 80 per cent of the total traded value on DFM in this month. There are about 65 stocks listed on DFM, meaning that 60 companies together accounted for only one-fifth of the total traded value during this period.
Coming to the number of trades, the statistics show that the same five companies accounted for almost 70 per cent of the total number of trades that took place on DFM during the period. Likewise, these five companies were responsible for more than 72 per cent of the trading volume on the exchange during the month of March 2011.
The flip side of the story is that the most inactive five stocks listed on DFM together witnessed only 12 deals during the whole of the month. Emaar Properties has always been driving the market ever since the stock was listed on DFM. As of March end, Emaar shares accounted for about 10 per cent of the total market capitalisation of Dubai Financial Market (DFM), which is capitalised at Dh194.823 billion as of March end, 2011.
DFM overall performance increased by 10.3 per cent to reach 1556.04 points at the end of March compared with 1410.7 points at the end of February. The market capitalization increased at the end of this month by 5.1 per cent to reach Dh194.8 billion compared with Dh185.3 billion at the end of February.
The value of shares traded during this month reached Dh5.2 billion, compared with Dh2.7 billion recorded during February, an increase by 91.2 per cent. Number of shares traded increased by 97.4 per cent to reach 3.6 billion shares during March compared with 1.8 billion shares traded during February.
The value of shares bought by foreign investors during this month reached Dh2.508 billion, constituting 48.3 per cent of the total value of shares traded. The value of shares sold by foreign investors during the same period reached ADh2.372 billion which comprises 45.7 per cent of the total value traded. DFM net foreign investment in-flow reached Dh136.6 million during this month.
© Banking & Business Review 2011
