DFM first quarter net profit rises 24% on higher trading value

Total revenue for the first three months of the year jumped 13% to Dh88.2m

Dar Takaful's shares closed 6.6% higher at 61 fils per share on the Dubai Financial Market on Sunday as it announced a Dh215m acquisition of two Noor Takaful business units. Christopher Pike / The National
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The Dubai Financial Market (DFM) reported a 24 per cent increase in first quarter net income as trading value improved and boosted revenue at the only listed stock exchange in the Gulf.

Net income attributable to owners of the company for the three months ending March 31 rose to Dh34.7 million, up from the year-earlier period, the DFM said in a regulatory filing on Thursday.

"In spite of the volatility of international financial markets, including DFM, due to the repercussions of unprecedented circumstances triggered by the Covid-19 outbreak, the DFM’s trading value has relatively improved during the first quarter of 2020," Essa Kazim, chairman of the DFM Company, said.

The exchange, which primarily earns income from commissions and fees, saw its quarterly trading value increase 19 per cent year-on-year to Dh14.2 billion as it attracted new investors.

The bourse's first quarter revenue also climbed 13 per cent to Dh88.2m in 2020, which included Dh49.1m of operating income and Dh39.1m of investment returns. Operating expenses rose to Dh53.5m during the first three months of the year from Dh49.8m in the same quarter of 2019.

The DFM results come as the Covid-19 pandemic rattled investors and hammered global stock markets amid gloomy economic indicators, plunging oil prices and dire corporate earnings.

The coronavirus crisis has wiped out at least $17 trillion from stock markets worldwide and forced governments to introduce more than $8tn in economic stimulus and relief packages as countries went into lockdown.

Despite the volatility in international markets, the DFM said it attracted 1018 new investors during the first quarter, bringing the total number of its investor base to 845,137 investors.

The market share of foreign investors reached approximately 51 per cent of trading activity during the first quarter and 18 per cent of the market capitalisation at the end of March 2020.

"We are looking forward to continue this positive movement during the coming period as a result of the numerous stimulus packages launched by the UAE leadership to support the economy during this exceptional period," Mr Kazim said.

To mitigate the impact of the coronavirus, the second-biggest Arab economy, introduced Dh282bn in fiscal and monetary support, including a Dh256bn package for banks that provided zero-interest funding and freed up capital to boost lending in the country.

In March, the Abu Dhabi Securities Exchange and the DFM said they are halving the limit that causes trading to cease once losses hit a specified level in a bid to contain market fluctuations.

The companies operating both bourses said the loss thresholds triggering a stop to trading was reduced to 5 per cent, from 10 per cent, on instructions from the the Securities and Commodities Authority. Similar measures have been implemented by exchanges worldwide.