Word that the country's securities regulator is unlikely to suspend trading of shares priced below 40 fils has sparked buying of those stocks. There was intense buying of Deyaar, Dubai's second-largest listed developer, with the stock rising 13.6 per cent to 34.9 fils, its highest level since May 27. Deyaar accounted for a third of trade volume yesterday on the Dubai Financial Market.
Deyaar is one of four companies trading 60 per cent below their nominal value of Dh1, which means the Emirates Securities and Commodities Authority (SCA) can suspend trading in the shares. In a statement released on Tuesday, Maryam al Suwaidi, the deputy chief executive of SCA, said there were no plans to stop trading in these shares, citing abnormal market conditions. "The regulation is in place for assuming normal market conditions. They cannot be implemented currently in the aftermath of the financial crisis, which resulted in severe decrease in all stocks," she said.
Investors took the statement as a signal to pick up the beaten-down shares. "The SCA announcement and the speculation that a positive announcement will come out of Deyaar's board meeting later this month has pushed it up," said Chahir Hosni, the equities sales manager at EFG-Hermes in Dubai. The Deyaar board meets next week and there was speculation in the market yesterday that a positive announcement would follow.
Shares in two other small-value stocks, National Central Cooling (Tabreed) and Union Properties, also rose significantly yesterday. Tabreed ended the day 7.9 per cent higher at 36.7 fils on the back of a trading volume of more than 15 million shares. Union Properties rose 5.4 per cent to 38.8 fils. It is down more than 66 per cent from its 12-month peak of Dh1.18. The fourth company trading below 40 fils, the Abu Dhabi-listed RAK Properties, also remained on investors' radar yesterday. It rebounded from early losses in the day and closed flat at 37 fils with more than 10 million shares changing hands.
Mr Hosni said smaller rallies were appearing more frequently in the market, which indicated that the market was making a push upwards. "We saw Emaar rally earlier, and today Deyaar led the small-value stocks rally, which is a good sign for the market," he said. @Email:skhan@thenational.ae
