DFM rebounds after five-day slide

Some Dubai-listed companies are set to be included into MSCI’s Emerging Markets Index next month, a move retail investors expect to trigger foreign investment inflows.
Dubai stocks were trading at a price-to-earnings ratio of 25, compared with 30 before the sell-off that began late last week. Jeffrey E Biteng / The National
Dubai stocks were trading at a price-to-earnings ratio of 25, compared with 30 before the sell-off that began late last week. Jeffrey E Biteng / The National

Dubai shares embarked on a roller coaster ride in yesterday’s trading session, snapping a five-day losing streak as more reasonable valuations tempted investors back into the market, fund managers said.

The Dubai Financial Market General Index dropped more than 2 per cent at the start of the trading session. But shares took a different direction by noon, before finishing up more than 4 per cent to 4,850.49 points at the 2pm close.

“After that sell-off, you’d expect to see a bounce-back, but its going to be very volatile,” said Tariq Qaqish, the head of asset management at Al Mal Capital in Dubai. “I don’t think it’s the end of it. The correction was healthy, but if prices drop further we’ll see a lot of investors buying at attractive valuations.”

After Tuesday’s close, the DFM had fallen more than 12 per cent in a week. Yesterday’s rebound brings year-to-date gains back above 43 per cent.

Emaar Properties rose 2.4 per cent to Dh9.48 a share. Arabtec Holding shares jumped 3 per cent to Dh6.43 each. Dubai Islamic Bank surged 5.8 per cent to Dh7.10 a share. DFM Company, the listed shares of Dubai’s bourse, rocketed 7.5 per cent to close at Dh3.44 a share.

Some Dubai-listed companies are set to be included into MSCI’s Emerging Markets Index next month, a move retail investors expect to trigger foreign investment inflows.

“The closer we get to implementation of the Emerging Markets Index, the more optimistic people get,” said Nabil Farhat, a partner at Al Fajer Securities in Abu Dhabi.

“Our clients are buying because they thought the drop was overdone to begin with. Then you have the optimism that resulted after Emaar and Arabtec rebounded – the two are the leaders in the market,” Mr Farhat added.

Dubai stocks are trading at a price-to-earnings ratio of 25, compared with 30 before the sell-off that began late last week, Mr Qaqish said.

“It’s still a bit expensive,” he added. “We are at the higher end, but better than before.”

Stocks on the Abu Dhabi Securities Exchange also rose higher yesterday.

Banks and property firms led lifted the emirate’s equity index.

Abu Dhabi Commercial Bank, the capital’s biggest lender, rose 4.1 per cent to Dh7.60 a share.

National Bank of Abu Dhabi gained 1.4 per cent to Dh13.70 a share.

Aldar Properties rose 3.8 per cent to Dh3.78 a share. Eshraq Properties, another listed developer, jumped 5.1 per cent to Dh1.63 each.

The Abu Dhabi Securities Exchange General Index closed up 1.72 per cent to 4831.48.

halsayegh@thenational.ae

Follow us on Twitter @Ind_Insights

Published: May 21, 2014 04:00 AM

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