Seven-day Dubai shares rally ends

Shares in Dubai closed down 0.7 per cent yesterday, breaking a seven-day rally, as Damac Properties’ surge reversed course.

Abu Dhabi stocks closed marginally lower in thin trading, while Saudi stocks closed half a per cent down.

The retail-investor driven rally that has made Damac the best-performing Dubai stock this year may be over for now, at least one technical indicator suggests.

The real estate developer closed 9 per cent lower yesterday, snapping seven days of gains that contributed to a climb of 75 per cent since the start of the year. A surge of buying from individual investors betting on generous dividend payouts boosted the company’s market value by a third in little more than the past week.

Since July 10, Damac’s 14day relative strength index has exceeded 70, a technical signal that a stock may have risen too rapidly and be poised to fall.

“While the shift in strategy towards a more sustainable business model is seen as positive on the long term, the rally did happen really fast,” said Issam Kassabieh, equities research analyst at Mena Corp Financial Services in Dubai. “We should see a correction going forward amid high volatility.”

While the stock may pull back following its recent rally, Damac is unlikely to revisit the levels around Dh2 a share, last seen in May, said Sanyalak Manibhandu, head of research at NBAD Securities in Abu Dhabi. The stock continues to trade at attractive levels compared with Emaar Properties and investors looking to build positions should buy at about Dh4 , he said.

Emaar Properties and Dubai Financial Market led gains in Dubai yesterday, rising 1.3 per cent and 0.8 per cent respectively.

Abu Dhabi stocks closed 0.1 per cent lower, with gains by UNB and Aldar Properties cancelled out by a fall by Etisalat.

In Saudi Arabia, Jouf Cement jumped 9.5 per cent in early trading after shareholders approved a 10 per cent capital increase via an issue of bonus shares, to be paid for with the company’s retained earnings. The stock ended the day up 4.8 per cent at 7.72 Saudi riyals.

Saudi Kayan initially rose on better-than-expected second quarter profits, but fell back during the day to close down 2 per cent.