UAE Stocks to Extend Bearish Run

DUBAI - UAE bourses are likely to extend their bearish run from last week, as investor are likely to stay on the sidelines ahead of fourth-quarter 
earnings results.

By Muzaffar Rizvi

Published: Sun 24 Jan 2010, 10:51 PM

Last updated: Mon 6 Apr 2015, 4:50 PM

Shares in property and banking sectors may remain under selling pressure as most investors doubt positive result announcements in the wake of the global economic downturn, analysts said.

They said market indices may continue to decline in the absence of major players and low volumes. The Dubai Financial Market General Index is likely to test the psychological barrier of 16,000 points while Abu Dhabi Securities Exchange index may slip below 2,600 levels this week. The market is not expecting any major rally through the earning season, as investors seem to have turned cautious towards stocks, especially in the property and banking sectors.

Dubai Financial Market and Abu Dhabi Securities Exchange remained bearish last week in subdued trading. Dubai Financial Market’s General Index declined 55.11 points, or 3.22 per cent, last week to 1,652.26 points. It broke psychological barrier of 1,700 points on last Sunday as investors preferred to exit the market amid lack of positive news. The benchmark index may get support at 1,600 points this week amid hope of some positive fourth-quarter results notably from Dubai-based logistic major Aramex and Abu Dhabi-based Finance House. Aramex shares gained 1.86 per cent last week and closed at Dh1.64.

“Everyone is now waiting for fourth quarter results. Buyers are sitting lower on bids and waiting for sellers to panic and hit the market lower,” Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading, told Khaleej Times.

“All about earnings now and the sooner we see them the better as the uncertainty caused by delay is more damaging than the reality of knowing,” he said.

“There are no real drivers in the market to move stocks,” another analyst said. In the property sector, Emaar shares hit hard last week. The company’s shares remained under pressure as it lost 6.53 per cent last week. Its shares began the week at Dh3.52 and fell below Dh3.52 levels to close the week at Dh3.29. The shares may test Dh3 levels ahead of the company’s fourth quarter results, due later this month.

Contractor major Arabtec shares also traded in negative columns despite securing contracts worth $202 million in Qatar and West Bank. Its shares contracted 2.07 per cent and declined to Dh2.36 amid lack of investors’ interest since the company announced deal with Abu Dhabi-based Aabar Investments. The shares are expected to continue their downslide till the company’s shareholders meeting clear the proposed acquisition deal by early next month.

Deyaar also traded in negative columns and fell 1.82 per cent to DhDh0.54.

In banking sector, Emirates NBD, Al Salam Bahrain Bank and Dubai Islamic Bank traded under pressure throughout the week and finally fell into negative columns amid concern over low profits and negative earnings growth in fourth quarter. Emirates NBD, the biggest bank of the region, tumbled by 5.13 per cent to Dh2.59. It opened the week at Dh2.75, but failed to resist the downslide. It may test the Dh2.5 levels this week.

Al Salam Bahrain Bank declined 4.26 per cent and closed the week at Dh0.90 while Dubai Islamic Bank stood firm at Dh2.15 after shedding 2.27 per cent last week.

In services sector, shares in Global Investment House, Shuaa Capital and DFM significantly fell. Global Investment House declined 17.36 per cent to Dh1.19 while Shuaa Capital and DFM finished the week 7.30 per cent and 5.92 per cent, respectively.

In telecom sector, du shares fell 2.07 per cent and closed the week at Dh2.84 per cent.

Abu Dhabi Securities Exchange also shed 70.47 points, or 2.60 per cent, last week as the shares in banking and real estate sector remained under pressure throughout the week. The benchmark index broke the psychological barrier of 2,700 points on Sunday last and mostly traded in negatively territory. The index may test 2,600 level this week and found support at 2,550 points on the back of positive fourth quarter earnings.

“Sellers are pricing in a gloomy picture from upcoming earnings and Dubai World restructuring and I don’t think that will be the case and as such both markets are offering attractive entry points if you have an investment horizon of more than a few days,” Wakeman said.

Foreign Investors

According to data released by the Dubai Financial Market, the value of shares bought by foreign investors, or non-UAE nationals, during last reached Dh598.2 million comprising 45 per cent of the total value of stocks traded during the period.

The value of stocks sold by foreign investors during the same period reached Dh570.6 million comprising 43 per cent of the total value of stocks traded during the period. Net foreign investment on the market reached Dh27.6 million during the same period, as aggregate buy.

The value of stocks bought by institutional investors during last week also reached Dh282.1 million comprising 21.2 per cent of the total value of stocks traded during the period. The value of stocks sold by institutional investors during the period reached Dh223.2 million which constitutes 16.8 per cent of the total value of stocks traded during the period. Net institutional investment on the market reached Dh58.9 million during the period, as aggregate buy.

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