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UAE equity index still stuck in sideways movements

DFM index falls 0.83% as liquidity concentrates on select stocks

Gulf News

Abu Dhabi: The UAE’s equity market indexes continued to move sideways on Monday amid strong liquidity in the market that was concentrated in select smaller cap stocks.

Woes about the Opec (Organisation of Petroleum Exporting Countries) meeting this Wednesday also weighed on investor appetite.

While there was selling pressure on a few stocks, the overall Dubai Financial Market (DFM) index fell 0.83 per cent to reach 3,310.48 as Brent crude prices fluctuated.

“We saw some profit-taking in the names that had rallied significantly, and that’s expected when the buyers lose their steam to continue buying. The second factor [impacting trade today] is we expect margin trading to be closed in the coming two days because it’s the end of the month, and thirdly, we have the Opec meeting on Wednesday and the implications of that,” said Tariq Qaqish, managing director of asset management at Al Mal Capital in Dubai.

Among stocks that dropped most on DFM were Shuaa (down 9.43 per cent), Deyaar (down 5.2 per cent), Union Properties (down 4.62 per cent), and Gulf Finance House (down 4.44 per cent) — all four of which had rallied in the past few days.

As for worries surrounding the Opec meeting, oil prices fell to a low of $46.28 (Dh169.98) in early trade, having already dropped on Friday, amid growing doubts that Opec will reach a deal to cut oil production at its meeting later this week.

“We see potentially high correlation (with equity markets) if oil prices drop significantly. It’s the main revenue stream for GCC countries, so we do expect the market to react to that news. In the long run, however, I think the downside is limited because most of the stocks have priced in the negative news from oil prices,” Qaqish said.

He expected markets to continue moving sideways from now till year-end, adding the first quarter of 2017 could see very strong moves in the market.

In the UAE capital, the Abu Dhabi Securities Exchange (ADX) general index fell 0.96 per cent to reach 4,256.98. On ADX, Julphar topped the gainers’ list with a 2.34 per cent increase, followed by Dana Gas with 1.85 per cent, and Abu Dhabi Commercial Bank with 0.33 per cent.

Of the 37 stocks traded on DFM, 26 went down and 11 went up. Of the 24 stocks traded on ADX, 14 declined, three advanced, and seven remained unchanged.

The sideways movement in the UAE mirrors shaky performance in Europe and Asia, which were also trading cautiously in anticipation of the Opec meeting and a testimony on Monday by Mario Draghi, head of the European Central Bank, on economic developments and consequences of the Brexit on Europe.

The Nikkei 225 index was 0.13 per cent lower, while the Hang Seng was 0.47 per cent higher.