Fed tapering leads to volatility on Dubai shares

Dubai index falls by 0.60% while Abu Dhabi index gains 0.26%

30/01/2014 17:58 AST

The DFM index slipped for a second day on Thursday by 0.60 per cent to 3,770.38 points as investors took flight from Fed’s decision and stoked fears of capital flows from emerging markets.
The Fed’s decision to trim its monthly bond buying to $65 billion from $75 billion had a mild effect on Dubai shares, an industry expert told Gulf News.
“The $10 billion tapering was expected but there was some people who thought that the sell-off in emerging markets might delay the tapering,” Vijay Harpalani, assistant fund manager at Al Mal Capital, said.
Lack of activity was evident as both the volume and value was halved when compared to Wednesday. The index has been volatile for the past week.
Among the gainers, Commercial Bank of Dubai (CBD) rose 6 per cent to Dh5.30, followed by National Industries Group for the second day by 2.44 per cent to Dh4.20 and Al Salam Sudan by 2.29 per cent to Dh3.58.
CBD rose as its net profit for full year increased by 18 per cent to Dh1 billion and the bank’s board has proposed a cash dividend of 30 per cent and bonus shares of 10 per cent, subject to the agreement of the shareholders.
The banking sector index was down as some banks have reported strong profits and dividends for the year but profits of some banks like Emirates NBD were not positive due to high provisions.
Asked whether the Fed impact can be felt for another couple of days in the UAE, Harpalani said it is difficult to predict.
“The market’s direction will depend on the next wave of corporate results to be unveiled next week. If the results are better than expectations, then the indices will move northwards,” he said.
Agility suffered the worst by falling 9.89 per cent to Dh8.38, followed by DP World by 4.21 per cent to $18.20 and Al Madina by 2.90 per cent to Dh0.670.
Of the 31 companies traded, five rose, 20 fell and six remained steady.
About 537.38 million shares worth Dh969.25 million were traded.
Gulf Finance House was the active value and volume leader.
In Abu Dhabi, investment and financial shares lifted the index higher by 0.26 per cent to 4,673.07 points.
First Gulf Bank, which has a huge weightage on ADX index, rose by 3.09 per cent to Dh20 to lead gainers list, followed by National Bank of Umm Al Quwain by 3.03 per cent to Dh3.40 and Waha by 3.02 per cent to Dh3.07.
Al Khazna Insurance suffered the worst by falling 8.24 per cent to Dh0.78, followed by Abu Dhabi Aviation by 6.25 per cent to Dh3.75 and Ras Al Khaimah White Cement by 5.85 per cent to Dh1.61.
Of the 37 companies traded, 15 rose and 22 declined.
About 235.46 million shares worth Dh868.22 million were traded.
First Gulf Bank was the active value leader while Aldar was active volume leader.

Gulf News