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Low turnover sees Dubai index retreat 2.17% |
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02/02/2009 10:24:13 AM |
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Low turnover and sideways trading are expected to be the main feature on the UAE stock markets for the next two months, according to analysts.
The pattern will continue at least until the release of first-quarter results, which will be decisive in changing the bearish trend in the market.
The Dubai Financial Market index retreated 32.98 points, or 2.17 per cent, yesterday to close at 1,487.26. Turnover was low after 164.4 million shares worth a total of Dh161.1 million changed hands. Gulf Navigation Holding was the only stock that advanced during the session, while 16 stocks declined and five remained unchanged.
There is widespread agreement among analysts that the 2008 results disclosed so far are satisfactory, but the lack of confidence and shortage of new liquidity dominated trading yesterday – and this situation is expected to continue for the next few weeks.
"So far the results for 2008 have been positive overall, though there are some negatives when comparing the figures for the last quarter of 2008 with those for the same period in 2007," said Amr Diab, head of institutional sales at EFG Hermes.
"However, investors have become less interested in 2008 results and are focusing on expectations for performance during 2009."
He said there were increasing concerns about the global economic situation and its impact on the local economy.
"The majority of trading is speculative and short-term investments by individuals, while institutions are making very cautious movements. This is clear from the calm trading in the market, which will continue for a long period.
"Investors need to get a clear view about the future of the economy because most active listed companies are related to the property and banking sectors, which have suffered the major hit from the global financial crisis. They need more confidence about the outlook for the economy before taking long positions."
Diab said results for the first quarter of this year would be critical for restoring investors' confidence in the markets, but this would take a long time.
Amjad Bakir, Trading Manager at Mac Sharaf Securities, said the DFM opened marginally positively but then fell throughout the session on continued selling pressure and the absence of good news.
"The market is still below the neckline resistance of 1,550 points and it should close above 1,620 to give indicators of a change in its trend to the upward side," he said. "However most active stocks closed lower and look to continue the bearish trend. This may create more pressure on the DFM to retreat towards its near support level at 1,400 points."
Bakir agreed the results announced so far gave positive indicators but said the shortage of liquidity was the main factor shaping trading patterns.
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Source:Business24-7.ae |
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