|11 December, 2017

How Dubai equity market can get its mojo back?

Volumes rose to over Dh1 billion in January 2017, but is yet to recover to those levels

An investor (L) gestures to an electronic display board at the Dubai International Financial Market, March 24, 2010.

An investor (L) gestures to an electronic display board at the Dubai International Financial Market, March 24, 2010.

REUTERS/Mohammed Salem
Dubai: Dubai index needs fresh positive triggers to attract volumes last seen in January, but there is plenty of news to be digested in the short term.

Traded value has been tumbling from a high of over Dh1 billion seen in January 2017, when the index was trading more than 3,700 levels. On Monday, the index traded much lower from January levels at 3,400 levels, with traded value nearly half of what it was then.

“It’s frustrating to see falling markets. When there is caution, volumes dry up. When there is optimism there is more traded value than expected,” Sanyalaksna Manibhandu, head of research, First Abu Dhabi Bank Securities told Gulf News.

In a matter of days, the announcement of special dividend to the Emaar shareholders after a lukewarm IPO of its unit along with the listing of Adnoc Distribution will set the tone for markets in the very short-term, analysts say.

Adnoc Distribution is giving an additional layer of investors being risk averse in the very very short term. That uncertainty will be lifted by the first day of trade. Once Adnoc proves that it will be not like Emaar Dev than risk appetite would revive,” said an analyst who wished not to be named told Gulf News.

Adnoc Distribution will list on the Abu Dhabi Securities Exchange on Wednesday.

And then investors will look at the busy dividend season to take advantage of the attractive yields. Emaar Properties has indicated of special dividend to its shareholders in January followed by the annual dividend in March and April. Adnoc also plans to give $200 million (Dh725 million) dividends in April. This would be in addition to the normal dividends that companies give in this market, which is known for its high dividend yields.

Even technically, the charts are showing a pattern.

Dubai index is now showing 2016 pattern, when markets moved in a range of 3,203-3,738, when volumes tumbled to Dh200 million in most part of the year, but in December it zoomed to more than Dh800 million.

In 2017 as well, volume also tumbled in May, June, the way it tumbled in 2016 as well, and has been on declining trend. But the question, will volumes recover like it did last December.

Fundamental analysts say it is more likely to. “The dividend season will be augmented by expected special dividend from Emaar Properties, which the company indicated will happen in. We will then have a pick-up in trading volumes,” the unnamed analyst said.

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