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Dubai bourse bounce continues for second session |
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12/31/2008 4:01:43 AM |
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The Dubai Financial Market's bounce continued for a second day yesterday as the index gained 5.92 points, or 0.36 per cent, to close at 1,639.34 points.
The market fluctuated sharply, gaining around 40 points in the first hour of trading but failing to maintain the strong upward movement and retreating by mid-session.
Analysts described the turnover as relatively satisfactory as trade volume surged to 306.3 million shares with a total value of Dh443.4 million. Twenty-four stocks were traded with nine advancing, 12 declining and three remaining unchanged.
DFM stock was the most active by both value and volume as 124.5 million shares changed hands during the session. There was also active trading in Emaar, Arabtec and Air Arabia. The major positive signs for analysts were a sharp decline in selling pressure on leading stocks and active trading by local and foreign institutional investors.
Hosam Al Husseini, Head of Brokerage at Emaar Financial Services, said selling pressure had suddenly disappeared during the past two sessions and he believed institutional investors had switched their strategy from selling to buying.
"Though there was not a major change in the value of the index during the session institutional investors – both local and foreign – were remarkably active," he added.
"Local institutions were entering the market for short-term trading and speculation while the majority of foreign institutions were covering their short-selling positions. I expect this active trading by institutional investors will continue for the next few sessions."
Ziad Dabbas, a Financial Consultant at the National Bank of Abu Dhabi, agreed that some institutions had entered the market to cover their short-selling positions.
However, he said the majority of new liquidity introduced by institutional investors was intended to help create long-term positions for 2009.
"Institutions made active movements during the last two sessions and they have two main targets," he added. "The first is to create new positions before the New Year as a base for their trading in 2009. The second is to reduce their operating costs because they bought some leading stocks at high prices.
"For example some bought Emaar at Dh10 and now the stock has declined below Dh2.50. They are trying to reduce the cost of their portfolios by collecting stocks at low prices to amend their balance sheets."
Sherif Abdul Khaleq, Institutional Trading Manager at Beltone Financial, said the index would remain stable within the range of 200 points up and down during the next few sessions due to the lack of strong positive signs in the market.
"Leading stocks broke through new lows during trading last week and now we are seeing a correction," he said. "Some stocks such as Arabtec and DFM are giving positive signs but these signs are still weak and there is no confirmation of a new trend in the market.
"This situation is leading to tendency for short-term trading and speculation while high-net-worth investors are waiting on the sidelines for positive indicators."
Abdul Khaleq said several stocks had fallen to very low prices and this attracted some investors wishing to build new positions.
"A large number of stocks were strongly devalued last week as the market had already discounted the bad news. The current correction will continue for a few sessions as investors are focusing on short-term trading."
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Source: Business24-7.ae |
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