Selling pressures drag DFM stocks down

29/06/2010 00:00 AST

The Dubai Financial Market (DFM) retreated for the third consecutive session yesterday amid continued selling pressure on leading active stocks and weak turnover.

The DFM index lost 17.78 points, or 1.16 per cent, to close at 1515.39 points yesterday. The real estate sector led the drop in the market, losing 2.2 per cent, while heavyweights in the banking sector lost 0.65 per cent.

Speculations and quick profit booking dominate the market at present.

Leading active stocks, especially Emaar, faced selling pressure when they tried to bounce up.

Emaar advanced to Dh3.29 during the first half of the session but faced quick profit booking and lost all its gains to close down 2.14 per cent at Dh3.20.

The stock also encouraged speculators after it moved in a relatively wide range of Dh3.14/Dh3.29 during the session. Emaar was the top active player and dominated around 45 per cent of the total trade value.

All other active stocks, including Deyaar, Arabtec, DFM and DSI, retreated amid selling pressure by the end of the session.

The banking sector created some pressure during intraday trading but heavyweights Emirates NBD and DIB managed to end the session flat at Dh2.60 and Dh2.01 respectively. CBD was the force behind the drop in banking sector after it retreated 2.9 per cent to Dh3.05 amid thin turnover.

Selling pressures saw a relative increase as brokerage firms were pressing on their clients to close their margin positions before they submit their monthly reports to the Securities and Commodities Authority. This is the trend during the last three sessions of every month.

"Brokers were closing open positions of their clients before preparing their monthly reports so we witnessed increasing selling pressure. This trend was clearer in the DFM as there was no buying interest in the market. Speculators could not move because their cash facilities were lowered by brokers and banks," said Hossam Al Husseini, Head of Brokerage at Emaar Financial Services.

He predicted that margin facilities will return in the next two sessions after brokers present their monthly reports to the SCA. However, he agreed that brokerage firms and banks had already slashed their financing facilities for investments in stock markets due to the prevailing uncertainty.

"Brokerage firms and banks reduced their financing facilities to investments in stocks after the markets lost their trend and started trading near their lows. However, margin trading will remain an integral part of investments as it is giving good financing facilities to speculators. We expect cash facilities to increase on the DFM once there is a clear trend," he said.

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