Dubai: Only a week into investing on the Dubai Financial Market (DFM), Nasser Al Mazmi has made a profit of Dh3,466. Surely that's not a big gain — a mere 0.35 per cent — on an investment of a million dirhams.
But come on, you have to give it to him. A 19-year-old student at Michigan State University in the US, Al Mazmi is investing in stocks for the first time and at a time when the market is usually slow with a majority of investors away on their summer break and consequently trading volumes low and the movement largely sideways.
Al Mazmi, who resides in Sharjah, is among the 140 odd students, who are taking part in this year's DFM and Ministry of Culture, Youth and Community Development-organised summer stock game for two weeks, to learn the basics of investing in stock markets and eventually put them on a path to making them learned investors in the future.
Along with Al Mazmi there are others like Mona Ahmad, who graduated this year with a marketing degree from UAE University, and Nasser Saeed, a student at the Ras Al Khaimah High School.
During the same period Al Mazmi had positive returns, Mona and Nasser made losses. The duo seemed to be unperturbed by the outcome until then, with hopes to turn around in the remaining one week.
Al Mazmi isn't disappointed with his meagre gains as he believes his participation in the summer game is primarily to gather insights into navigating a market when choices are limited to one market, namely the DFM and that too when the majority of stocks are in sectors which have been badly hit by the crisis.
The young finance and banking major chose Emaar, Arabtec, Air Arabia and Deyaar in the first week, starting July 12, primarily for being among the most active stocks on the exchange, though he regrets investing about 65,000 shares in the last one. He studies the companies and trends of the market but he added that he sometimes does ask some of the brokers on the floor of the DFM for suggestions. "But even brokers can be wrong," Al Mazmi adds.
His other reasons for choosing Emaar, Arabtec and Air Arabia sounded very much like any fund manager.
These are fundamentally sound companies, Al Mazmi said, with an improving balance sheet for Emaar, and growing prospects for Arabtec, which has been receiving new contracts outside Dubai and has also received payments in the past weeks. In fact, trading on Arabtec shares brought profits in the first week. He had put a buy order at Dh1.71 and sold at Dh1.84, making a healthy return of 7.6 per cent.
At the time of the interview last Monday, Emaar had moved up to Dh3,300 from his buy order price of Dh3,270 and like an experienced investor he was willing to wait before he sells. He expects the price to rise further in the remaining week. For Deyaar, he would be doing the same — waiting it out, but has a stop loss price to get out if it declines further.
Mature beyond his years and a first time investor — to be precise a week old investor — he knows that investing in equities is fraught with risk. He is very much aware how the local markets are now tied to the global ones and hence subject to increased volatility.
He has seen his father and uncles indulge in the stock market but within limits. Taking a cue from their behaviour, he says, investing in shares will be a small part of his overall investments in future. But before that he has to educate himself and learn all the ways to analyse the markets, which he wants to continue from now on and even after he returns from the US after completing his studies and starts working.
"It will take time before I start investing," Al Mazmi said. "I have to learn and educate myself more. The way markets go up and down like waves, to me it is a high risk venture. It is not the safest investment."
This is the kind of awareness that is the purpose behind such an event.
"It is a tool for the new generation that would allow them to be smart investors in the future, entering the market with a full understanding of all the elements that go into stock market investing," said Jamal Al Khaddar, senior vice president and head of product development division at DFM.
The stock market game, both the summer and the one held in April, which is attended by thousands of school and college students, is his brainchild. The summer stock game is in its second year and has been expanded beyond Dubai. The DFM and the ministry have come together this year to take this game to Emirati students in Sharjah Fujairah, Masafi and Ras Al Khaimah. Khaddar conducted orientation classes before the summer participants took the plunge. He explained the bourse's functionality and mechanism and how to trade through the stock game website.
The participants have an opportunity to virtually trade in securities listed on the Dubai Financial Market through the market website as per the live prices during trading hours. They have a virtual amount of Dh1 million with which they buy and sell shares and securities during the competition.
The student-investors must make a minimum of 20 trades — buy and sell — to receive a participation certificate, with the top three gainers winning an iPad, a mini laptop and iPod respectively.
At the UAE University, students of business administration are taught about stock market trading and different listed companies. The summer game provides an opportunity to apply all she has learned in theory during her undergraduate studies, said Mona Ahmad, the recent graduate of the university. She has invested in Emaar, Deyaar, Arabtec and DFM for some of the same reasons as Al Mazmi. However her buying and selling haven't yet translated into profits. In fact she has lost money. "I am trying," she says modestly, "It's risky and will trade to see if I can stop further loss."
High school student Saeed sees his participation as a good way to spend the summer holidays, learning a new set of finance skills and enjoying at the same time. "Why waste time in the summer? It is fun to have Dh1 million to invest. It really gets to you," he said.
Saeed has more defensive names such as Air Arabia and Aramex, but he, like Mona, is in the red, but minimally so. His other investments include Emaar, Arabtec, Ajman Bank and DIC. With a week to go, he believes stocks such as Emaar will allow him to at least be even.
No risk, no gain, is his mantra. "Higher the risk, higher the profit," he said, sounding confident of turning the corner before it ends.
