Arabtec’s rebound spurs benchmark as company assures investors
03/07/2014 06:31 AST
Dubai shares rose the most in the world on Wednesday amid growing speculation that the sell-off that wiped off almost a quarter of the benchmark index’s value has run its course.
The Dubai Financial Market (DFM) index ended the day’s trade with a 7.92 per cent increase — the most since September 10 — to reach 4,389.94 on the back of a 14.93 per cent gain by powerhouse Arabtec.
Meanwhile, the Abu Dhabi Securities Exchange (ADX) general index jumped 4.96 per cent to reach 4,806.75.
Real estate developer, Arabtec, whose performance has been marred by instability and a 63 per cent plunge from its May peak, reached a closing price of Dh3.31. The rise marks the most increase since April 2012.
Prices started off at a value of Dh3.17, and reached a minimum of Dh2.9 with strong trade throughout the day. Continued fluctuations saw a general incline, with prices reaching their closing Dh3.31 at around 12.30pm.
Other Dubai powerhouses also ended trade in the green as Union Properties gained 14.84 per cent, Drake & Scull International grew 14.73 per cent, Dubai Investment Co inclined 12.67 per cent, and Emaar went up 5.06 per cent.
Osama Al Ashry, a member of UK organisation, Society of Technical Analysts, attributed the growth in markets to a correction.
“Prices reached unreasonable values recently, and many stocks lost over 50 per cent of their value, so it’s only natural that there were would be corrections in the market. Plus, these drops encourage investors to buy on the cheap, and thus, causing the index to bounce back. ,” he said.
Al Ashry added that the MSCI upgrade has changed the trends of trade in the market, making it more aggressive. He warned, however, that markets are still risky.
“The DFM index dropped 30 per cent throughout June, so now it needs to go past 4,590 in order to for trade to be on the safe side. If it does pass this level, the index can go past 6,000, but I don’t expect that to happen,” the analyst said.
Commenting on Arabtec’s performance, he said he expected to see prices at Dh3.80 at one point during trade on Thursday.
As for ADX, Al Ashry said the index needs to break a resistance of 4,980.
Of the 34 stocks traded on DFM, 29 went up, two went down, and three remained unchanged. Of the 29 stocks traded on ADX, 25 advanced, three declined, and one remained flat.
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