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ADX index slides over 2% ahead of Eid holiday

Profit-taking continues as traders sell banking, telecommunications stocks in Abu Dhabi

Gulf News

Dubai

The Abu Dhabi bourse’s main index plunged over 2 per cent on Wednesday as profit-taking activity continued ahead of the Eid Al Fitr holiday, when stock exchanges will be closed.

The Abu Dhabi Securities Exchange (ADX) general index ended the day at 4,633.2, down 2.13 per cent, as the Dubai Financial Market (DFM) index slid 0.9 per cent to 3,051.14.

“I think it’s just profit-taking and positioning before the Eid holidays. I don’t think it’s significant in the medium-term scheme of things. We had a fairly decent run-up over the last couple of weeks,” said Saleem Khokhar, head of equities at First Abu Dhabi Bank’s asset management group.

In Abu Dhabi, the decline in the index was led by powerhouses including banking and telecommunications stocks whose share prices fell. Abu Dhabi Commercial Bank, which was the most actively traded stock on ADX, declined by 1.83 per cent to Dh7.5 as First Abu Dhabi Bank lost 3.54 per cent of its value to reach Dh12.25.

Another heavyweight, Etisalat, saw its share prices fall 2.67 per cent to Dh16.4.

“It’s mostly the short-term retail investors, and it’s simply because many will be going away for an extended period. I think Saudi will be off for about 10 days, and Oman for about a week, so people are looking for profits before they head off,” FAB’s Khokhar said.

He pointed that the decline in Abu Dhabi’s index was likely exacerbated by thin trading volumes, with just Dh157 million worth of trade on ADX.

In Dubai, blue chips Emaar and Dubai Islamic Bank were the most actively traded stocks in the market, accounting for 40 per cent of the Dh139.8 million in total trade. Emaar’s share prices dropped 1.74 per cent to Dh5.65 while DIB’s went down by 1.54 per cent, with most other stocks also ending the day in the red.

“I think [the outlook] is positive for the UAE in general,” Khokhar said.

“You’re coming now from a low base, so the potential is high. You’ve heard of the spending announcements for the UAE, and that starts to shore up the other fundamentals, so we were looking for a catalyst to unlock the low valuations that we have, and I think that’s the sort of announcement that will push us in that direction.”

Trading on the UAE’s stock exchanges will be closed during the first three days of the Hijri month of Shawwal, and will resume on the fourth. (Astronomers are yet to declare when the first day of Shawwal will be.)

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