DFM first quarter net profit more than halves on lower trading values

Total quarterly revenues also slumped 34% to Dh99.1m

Dubai Financial Market on Tuesday reported a 52% drop in its first quarter net income. Randi Sokoloff / The National

Dubai Financial Market on Tuesday reported a 52 per cent drop in its first quarter net income, as lacklustre trading at the only listed bourse in the Arabian Gulf region, pushed trading value lower and crimped revenues.

Net income for the three months ending March 31 slumped to 48.9 million from Dh102.3m reported a year earlier, the DFM said in a regulatory filing. The exchange, which mainly earns income from commissions and fees, said the quarterly trading value more than halved to Dh20.4 billion from Dh47.8bn recorded for the first three months of 2017.

"The results of some of the [listed] companies were a bit disappointing and investors are not that interested at the moment," Nabil Rantisi, the managing director of capital markets at Daman Investments, said. "It looks like more or less the same scene for the DFM in the second quarter what we have seen in the first quarter."

The first-quarter 2018 revenue also decreased by 34 per cent to Dh99.1m, which includes Dh60.7m of operating income and Dh38.4m of investment returns. Operating expenses during the quarter climbed to Dh50.2m from Dh47m reported a year earlier.

Stock markets in the GCC including the DFM had lagged a global stocks rally last year as lower oil prices and softer economic conditions dented investor confidence. Trading activity is still far from the pre-oil price crash levels as geopolitical concerns continue to weigh down on the markets. The DFM General Index, the benchmark gauge has declined more than 11 per cent since the beginning of this year.

Despite a fall in trading value and revenues in the first quarter, the DFM said it continued to attract new companies and implemented structural changes during the quarter. The exchange last year added Emaar Development company to its list of traded securities, the largest listing on the index since 2014. It managed to attract cross listings of Bahrain’s Ithmaar Holding and Egypt’s Naeem Holding stocks at its trading platform during the first quarter.

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“DFM has maintained and strengthened its position as the most favoured listing venue for the leading local and regional companies,” Essa Kazim, the chairman of DFM company, said. The development initiatives were “aimed at further enhancing its infrastructure and regulations in line with international best practices as part of its strategy 2021”, he noted.

Equity markets in the Arabian Gulf are poised for a better year in 2018, supported by a strong pipeline of big-ticket initial public offering, including Emirates Global Aluminium listing in the UAE and the Saudi Aramco's mega share sale, which may raise as much as $100 billion.