Emaar leads pressure on Dubai index

Emaar Properties’ stock declined to its lowest price in three years yesterday after it broke through its critical support level of Dh9 and closed for the first time at Dh8.77.

The decline in Emaar’s stock also created selling pressure on the Dubai Financial Market (DFM) General Index.

The stock was the leading player by the end of the week, topping the most active lists by both value and volume. Other leading stocks in the market, including DFM and ENBD, declined during the session, leading to more pressure on the index.

The DFM closed at 4689.17 yesterday, after it lost 59.59 points, or 1.25 per cent.

The index also entered its critical support channel of 4650-4700 points after managing to close over this level for the previous four sessions. The index broke through its support level with increasing turnover rates as trade volume reached 149.3 million shares at a total value of Dh740.1 million, nearly double the turnover in the previous session.

The market was fluctuating during the last few sessions without breaking the support level, giving negative indicators that the downturn trend will continue on the short-term.

Fears increased among analysts that the negative sentiment in the market may lead the index to further loses and reach the level of 4400 points, while others expected that the range of 4550-5600 points would be the last wave in the current downturn trend.

Despite increasing expectations that the downturn trend has lost its momentum and the high selling pressure in the market have started to ease, there are increasing worries that the deep loses would affect the expected reversal.

Analysts also noticed continued selling pressure during the downturn trend and this is creating more negative sentiment among many investors.

“The DFM is projected to lose another 100 points which is the expected base of the market. The continued decline has several factors such as the tightness in liquidity, low turnover and continuous selling pressures. However, we expect the base will start formulating by the third week of Ramadan, or probably by the end of next week,” said Ahmed Al Rawi, head of trading at Dubai Financial Brokerage.

“Foreign investors are still selling their holdings, while local investors have not returned to the market yet.

“We expect these selling pressures will ease after a few sessions and new liquidity will start entering the market very soon. Emaar’s stock reached very low levels and it may decline to about Dh8.50.

“However, we expected a short rebound early next week. The current wave of declines is expected to be the last wave and any reversal in the market is expected to attract huge liquidity,” Al Rawi said.

ADX continues its downturn

The Abu Dhabi Securities Exchange (ADX) continued its downturn trend to an important support level of 4300 points. The index closed yesterday at 4311.01 points, after it lost 33.05 points, or 0.76 per cent.

Aldar and Sorouh, the leading active stocks in the market, declined through their support levels, with Aldar closing at Dh8.95 and Sorouh reaching Dh6.89. Mohamad Al Beheiri, head of trading at Amana Financial Services, said the next support level for Aldar would be Dh8.50 while Sorouh would face a support level at Dh6.25. He added that heavyweight stocks would continue to support the ADX index during the near future despite the long-term trend in the market being on the downturn.

Emirates Business