Abu Dhabi: The Dubai Financial Market (DFM) ended its short rally on Monday, as the index and powerhouses fell on the back of lower oil prices, with Brent crude dropping below $44 a barrel.
The DFM index slid 1.05 per cent to reach 3,255.14 as liquidity dropped to just Dh251.8 million in total trade value. Meanwhile, the Abu Dhabi Securities Exchange (ADX) general index was almost flat, dropping 0.01 per cent to reach 4,250.38.
The performance of the DFM index on Monday marks a drop from the 2.9 per cent jump seen on Thursday — the highest daily gain in over three months — and the 0.5 per cent increase on Sunday.
Saleem Khokhar, head of equities at the National Bank of Abu Dhabi’s asset management group, said that investors were cashing in on profits from the last two sessions of trade.
“If you look at the market on a purely fundamental basis, there’s real value. The technical side still doesn’t support a complete rally just yet, so I think we’ll see this continued volatility for a little bit.
It’s difficult to pin down when the market will recover, but when we get some clarity on where the oil price settles is when we’ll see recovery because at the moment, that’s what we’re being driven by more than anything else,” he said.
Khokhar said he expected to see relative stability in oil prices around the second half or the third quarter of next year. He added that investors are still waiting for catalysts to drive the market specifically regarding reforms and oil prices.
“If you look at what is happening [with oil], the supply side of the equation is adjusting quite strongly outside of Opec [Organisation of Petroleum Exporting Countries], so the more expensive regions like US shale are beginning to come offline. It’s the supply-demand equation for oil that is impacting our region the most, I would say,” he said.
In Dubai, Arabtec share prices fell 4.13 per cent, Amlak plunged 4.03 per cent, Damac Properties slid 3.38 per cent, Air Arabia ended 1.59 per cent lower, and Hits Telecom dropped 4.88 per cent. However, Ajman Bank was up 0.5 per cent.
From a technical standpoint, the DFM index has a support level of 3,069, which the index is expected to reach, according to Analyst Osama Al Ashry who said that the rally in the past few sessions was merely corrections.
“I think we could see Brent crude between $37.9 and $35.8 a barrel within a few weeks, so I’m expecting a new low for the DFM index. Emaar, for example, could reach a new low of Dh5.5 or Dh5.3, which can single-handedly bring the market down,” he said.
As for ADX, Al Ashry, a member of UK organisation, Society of Technical Analysts, said that the index could reach its support level of 4,180, which it has already touched during trade this month but managed to bounce back from.
In Abu Dhabi, Union Insurance topped the gainers’ list with a 12.04 per cent increase, followed by National Marine Dredging Co. with 11.73 per cent, Waha Capital with 2.75 per cent, Ras Al Khaimah Ceramic Co. with 2.64, and Agthia Group with 2.63 per cent.
Of the 31 stocks traded on DFM, 24 went down, six went up, and one remained unchanged. Of the 30 stocks traded on ADX, 12 advanced, 11 declined, and seven remained unchanged.
Elsewhere in the region, Saudi Arabia’s Tadawul index fell 0.41 per cent to reach 7,149.61.