DFM down as investors lock profits

Dubai: Investors in Dubai moved in on expected lines to lock profits on Tuesday after Monday's hefty gains, bringing the benchmark down by more than one per cent.

The Dubai Financial Market General Index fell 1.09 per cent to close at 1743.90, led by Emaar Properties, Dubai Financial Market, Air Arabia and Arabtec. However, there were some prominent gainers too including Emirates NBD, Shuaa Capital and Dubai Islamic Bank.

Arabtec plunged nearly 10 per cent to end at Dh2.34 after its $1.3 billion deal in association with Malaysia's WCT Bhd. to construct Dubai's premier racecourse facility was cancelled by Meydan LLC for reasons of failing to stick to the time schedule.

"Volatility will be the order of the day at the moment in the UAE and as you saw rebound was very aggressive yesterday. So you will expect some profit taking activity after such a rebound," said Rami Sidani, head of Middle East and North Africa funds at Schroeders Investment Management.

"However, in my opinion I dont expect to see any sustainable rally from here, unless we see some fundamental improvement in the outlook of the economy.

"The worst is definitely priced in. However to see a sustainable rally investors have to be convinced earnings have bottomed,"

In Abu Dhabi, however, stocks extended gains for the second day in the week. It closed 1.18 per cent higher at 2555.54. Real estate stocks such as Aldar Properties and Sorouh Real Estate rose 1.63 per cent and 6.38 per cent to close at Dh4.37 and Dh3.67 respectively.

Abu Dhabi Commercial Bank was up 4.62 per cent to Dh2.04 and National Bank of Abu Dhabi advanced 6.78 per cent to Dh10.40. etisalat lost 0.94 per cent to close at Dh10.55. Dana Gas declined 3.17 per cent to end at Dh0.61.

Investors in Dubai's stock market, which is weighted heavily in favour of real estate, are still looking for some clarity and visibility on the measures taken by the government to stimulate growth in the sector, feels Sidani.

The government has been doing its bit to to aid the recovery and regulation of the property sector, he said.

It has injected liquidity into the banking system, brought about the merger of the country's two largest mortgage lenders, and also taken regulatory measures such as capping payment from investors at 20 per cent before construction begins.

"Definitely the government is moving fast, but we need to see these actions bearing fruit and it will take some time," Sidani added.