Focus on small caps keeping market liquidity high

In Dubai, around 40% of liquidity went to UPP, Deyaar

Gulf News

Abu Dhabi: Liquidity remained high in the UAE’s equity markets on Sunday, though investors continued to focus their trades on the smaller cap stocks rather than on the blue chips.

In Dubai, 36 per cent of the Dh1.05 billion in total traded value went to Union Properties and Deyaar, which jumped 11.4 per cent and 6.3 per cent respectively.

Other stocks that were most active in terms of traded value were Gulf Finance House (accounting for 17 per cent, with shares down 1.1 per cent) and DXB Entertainment, which accounted for 16 per cent of total trade and whose shares fell 5.8 per cent.

“The focus is on the small caps, and it’s mainly retail-driven towards the low-liquidity stocks that are easy to move. It’s the nature of the season; going into year-end you’ll find a lot of focus on tradable ideas, stocks that lagged during the year, stocks that underperformed the market, and any eye-catchers that traders focus on, and that’s what’s contributing to the liquidity,” said Marwan Shurrab, fund manager and head of trading at Vision Investments & Holdings.

Given the smaller caps’ low weight on the overall bourse index, the Dubai Financial Market (DFM) general index was up just 0.43 per cent to reach 3,338.23.

Investors in the UAE also seemed unfazed by expectations from the Opec (Organisation of Petroleum Exporting Countries) meeting later this week as well as the strengthening US dollar.

“From now till year-end, I think focus is still maintained on tradable ideas and dividend pays. Blue chips will start coming into play as we approach the end of the year and Q4 results. It’s very important to look at companies in terms of valuations as well, so the more clarity we get on the financial picture, that will help valuating companies and seeing where they should be standing,” Shurrab said.

Factors

From a technical side, he said the resistance level for the DFM index is 3,400, which is only 62 points away. Shurrab added that the DFM index could even easily reach 3,600 and see further upside movements, though that will depend on whether geopolitical, economic, and political factors are all on the upside.

In the UAE capital, however, liquidity was much weaker, at just over Dh102 million, as the Abu Dhabi Securities Exchange (ADX) general index rose 0.59 per cent to reach 4,298.34.

On ADX, Asmak topped the gainers’ list, rising 7.8 per cent. It was followed by Abu Dhabi National Insurance up 7 per cent, Al Khazna Insurnace gaining 5.56 per cent, and Abu Dhabi National Hotels up 4.25 per cent.

Of the 39 stocks traded on DFM, 18 were up, 14 were down, and seven remained unchanged. Of the 30 stocks traded on ADX, 11 advanced, 13 declined, and six remained flat.

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