UAE stocks retreat on first trading day of 2015

The market is struggling with attracting back liquidity mainly of high net-worth and international institutional investors, said Mohammed Ali Yasin, the managing director at NBAD’s brokerage unit.

Dubai led Arabian Gulf shares lower on the first trading day of the year after negative sentiment from oil’s drop to $56 a barrel kept investors on the sidelines.

“It’s not a great start to the year, with investors slow to return to the market,” said Mohammed Ali Yasin, the managing director at NBAD’s brokerage arm. “The market today is, still if anything, struggling with attracting back liquidity mainly of high net-worth and international institutional investors. The volumes are low, and in the absence of these two drivers we see limited movement.”

Traded value on the Dubai Financial Market stood at Dh311 million, a decline of 70 per cent compared with the 50-day average of Dh1.06 billion.

“It’s the first day of trading, no foreign participation … people are waiting to see how commodities will react this year,” said Marwan Shurrab, the fund manager at the Dubai-based Vision Investments & Holdings. “There’s a lot of uncertainty and investors are shying away.”

The Dubai Financial Market General Index declined 2.2 per cent to 3,689.06 points. The Abu Dhabi Securities Exchange General Index followed suit, losing 1.6 per cent to 4,452.27. Qatar's index slipped 0.4 per cent to 12,229.08 points, while Saudi Arabia's Tadawul fell 0.6 per cent to 8,356.93 points. Oman and Bahrain's bourses were closed.

Dubai’s decline was triggered by lower oil prices, equity reactions from Saudi Arabia and margin calls.

"There's light volume today as investors continue to deleverage their positions", prolonging a rout triggered by Saudi Arabia's bourse last month on lower oil prices, said Nabil Farhat, a partner at Al Fajer Securities.

Brent crude declined 1.6 per cent on Friday to $56.42 a barrel after a decline of 48 per cent last year. This has forced Arabian Gulf states to tighten their fiscal budgets.

“Oil prices fell when the market was closed here, and that negative sentiment has filtered through,” said Vijay Harpalani, the assistant fund manager at Al Mal Capital.

Market observers also expect investors to stay away from riskier asset classes until first quarter earnings are released.

“I am hoping to see better action in the market after the quarterly distribution of dividends arrives to people’s pockets and incentivises people to come in and invest,” Mr Yasin said. “There are challenges both internationally and locally, and that’s why people have less confidence for market movement in 2015 today than at the same time in 2014.”

Property and construction stocks led the declines on the DFM.

Deyaar Development and Union Properties fell 2.9 per cent and 3.3 per cent to close at 82 fils and Dh1.17, respectively.

Arabtec Holding lost 3.7 per cent to Dh2.82 a share even as it was reported that Dubai's biggest contracting firm was looking at potential takeover targets. Its rival, Drake & Scull International, also followed suit, losing 3.2 per cent to 86 fils.

Property and financial stocks led the declines on the ADX.

Eshraq Properties fell 1.2 per cent to 78 fils. Aldar Properties, the biggest developer in Abu Dhabi, tumbled 6.4 per cent to Dh2.48. RAK Properties lost 2.7 per cent to 72 fils.

FGB, the Abu Dhabi lender, shaved 1.4 per cent to Dh16.75. Abu Dhabi Islamic Bank, the Sharia-compliant lender, lost 2.6 per cent to Dh5.55.

Follow The National's Business section on Twitter