24/12/2015 08:26 AST
The UAE’s benchmark indexes moved less than one per cent each on Wednesday as speculations continued amid a lack of catalysts in the markets and as investors attempted to consolidate portfolios before the end of the year.
The Dubai Financial Market (DFM) index slid 0.31 per cent to reach 3,137.32, with the index reaching a low of 3,112 during the day. The movement brings the index’s total gain this week to 2.1 per cent.
The Abu Dhabi Securities Exchange (ADX) general index rose, however, 0.77 per cent to reach 4,241.73.
Mohammed Yasin, managing director of the National Bank of Abu Dhabi’s Securities, pointed there was some profit-taking activity, with the DFM being led by speculative shares like Arabtec, Amlak, Gulf Navigation, and Gulf Finance House.
“Although we see a high number of shares traded on Arabtec, the net worth that was held by investors at the end of day is about three per cent of its total traded value, so that tells me a lot of this activity is day trading,” he said.
On Tuesday, Arabte’c share prices jumped 14 per cent — the most in a year — amid speculation that the company is close to winning contracts from Aldar Properties, the property developer listed on ADX.
On Wednesday, Arabtec continued to account for the lion’s share of almost 41 per cent of the total market trade value (Dh199.4 million worth of Arabtec shares were traded), as share prices rose 2.48 per cent.
“For construction companies, the [profit] margins are very slim, so even if, let’s say, they win a Dh500 million contract, you’re talking about a net profit of about Dh20 million — Dh30 million, which doesn’t really move the needle when you talk about losses of [Dh2.3 billion],” Yasin said.
Arabtec had reported net losses of Dh2.34 billion in the first nine months of this year — Dh1.02 billion of which were in the third quarter of 2015 alone.
Away for individual stocks, Yasin said he hoped the DFM index would maintain its level above 3,000 over the next few sessions before the end of this year, although he questioned whether that was likely.
“What worries me is that the market may be able to maintain itself provided we don’t get any negative news from outside. There’s still worry from leading markets like the USA’s that they may have some liquidity issues in the high yield bond market, and if that reflects on their performance, it will also have an impact on us.
With a lack of catalysts to change the current momentum, we need to be cautious about our expectations on the short term,” he said.
On DFM, Gulf Finance House jumped 8.6 per cent, though Amlak fell 3.42 per cent, Emaar slid 1.38 per cent, Damac Properties dropped 0.83 per cent, and Drake and Skull International ended 1.63 per cent lower.
In the capital, Ras Al Khaimah Poultry and Feeding Co. topped the gainers’ list with a 14.8 per cent increase, followed by National Marine Dredging Co. with 9.6 per cent, First Gulf Bank with 3.67 per cent, Gulf Pharmaceutical with 2.38 per cent, and Dana Gas with 2.08 per cent.
Of the 34 stocks traded on DFM, 16 went down, 15 went up, and three remained unchanged. Of the 32 stocks traded on ADX, 14 declined, 10 advanced, and eight remained flat.
Gulfnews
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