Business | Markets
Effects of low trading bite as UAE shares dip
UAE shares ended mixed on Wednesday amid continuing weak sentiments reflected in extremely low trading volumes that is unlikely to pick up until the year end with banks reluctant to extend liquidity for reasons of stabilising their balance sheets in the fourth quarter.
- By Gaurav Ghose, Financial Features Editor
- Published: 00:02 November 27, 2008
Dubai: UAE shares ended mixed on Wednesday amid continuing weak sentiments reflected in extremely low trading volumes that is unlikely to pick up until the year end with banks reluctant to extend liquidity for reasons of stabilising their balance sheets in the fourth quarter.
Declines across the board - energy, telecom, banks and real estate - sent the Abu Dhabi Securities Exchange Index down, 1.65 per cent to 2,685.54. The Dubai Financial Market General Index climbed 0.53 per cent to 1,872.29, extending its two-day gain to 3.15 per cent.
On DFM, trading volume dropped 61.07 per cent to 154.34 million shares and turnover tumbled 55.55 per cent to Dh266.18 million. ADX, also, witnessed declines on both counts, with turnover sliding 28.67 per cent to Dh206.02 million and volume decreasing 41.96 per cent to 56.05 million.
"The confidence levels are so low and the liquidity availability is so slow in the system, that any sign of recovery in the next few sessions does not look like being on the cards," said Mohammad Ali Yasin, managing director of Shuaa Securities.
"It looks like banks are set on not extending any loans till year end just to stabilise their positions and try to achieve one-to-one loan to deposit ration on their balance sheet. Any easing of that tightness will not come up before the first quarter of next year."
Emaar Properties remained flat to close at Dh2.56. Arabtec, the biggest construction company in the UAE, soared 14.79 per cent taking its two-day gain to 29.76 per cent.
Talking to investors and brokers, it's clear that sentiments are badly frayed. They seem helpless in the face of what they say is a common occurrence on the markets here, that of short selling, more so by investment banks.
They point out the pressure on Abu Dhabi banks, especially picking up on the example of First Gulf Bank, which announced buyback. The bank, which started buying back its shares on Tuesday, declined 14.30 per cent in the past two days to close at Dh8.92 on Wednesday.
"And what that tells me - and I am worried - is the financial institutions which do short selling, whenever they see a buyback announced, they start selling to pressure the market to drop it. Nothing has changed in terms of release of information or in terms of statistics other than the buying back of shares," Yasin said.
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