UAE markets trade sideways on Iran talks
DFM INDEX EDGES UP 0.13% AS AMLAK DOMINATES TRADE
Equity markets in the UAE traded sideways yesterday after Iran and the US agreed to extend their talks over Tehran’s nuclear plans past the original June 30 deadline to July 7.
The Dubai Financial Market (DFM) index crawled up 0.13 per cent to 4,092.3, while the Abu Dhabi Securities Exchange (ADX) general index slid 0.55 per cent to 4,697.11.
In Dubai, Amlak continued to dominate trade, accounting for Dh603.5 million (63 per cent) of the total Dh958.1 million traded in the market. Share prices, however, only went up 0.36 per cent to Dh2.79. The new price’s significance lies in that it is a resistance level that can take shares to Dh3.17, Analyst Osama Al Ashri had earlier told Gulf News.
Other analysts continued to stress that Amlak’s trade is calculated by brokers who are deliberately trying to bring share prices up, and is not based on investors looking at the company’s fundamentals.
Speculations
Sebastien Henin, head of asset management at The National Investor, attributed the large trade value to speculations. “The current price is very far from the actual valuations. A lot of brokers have done preliminary Saudi Arabian stocks fell early yesterday as oil prices weakened and Salama Cooperative Insurance plunged in response to a rights issue.
Brent crude slipped more than 1 per cent to around $62.60 (Dh230) a barrel yesterday morning after Greece defaulted on its debt and data showed both US and Opec oil production had hit records. This ended Tuesday’s round of buying by retail investors.
The Saudi stock index dropped 0.4 per cent as petrochemical producer Saudi Basic Industries lost 1.2 per cent. Salama tumbled 35 per cent to 19.10 riyals after announcing plans for a rights issue between July 1 and 28; shareholders will be entitled to buy 1.5 new shares for every share held, at a price of 10 riyals. work to assess the company, and the valuation was a fraction of the current market price. Amlak is by far overvalued at this price. At some point, the rationale will have to come back into the equation, and then people will realise that the price is completely unrealistic, and it will fall back,” he said.
Meanwhile, Arabtec went up 0.38 per cent, Amanat gained 3.33 per cent, Dubai Ports World ended 1.73 higher, and Union Properties remained flat.
Emaar, however, fell 0.76 per cent just one day after announcing that Emaar Misr, the company’s unit in Egypt, is expected to start trading in Cairo’s stock market.
Geopolitical factors
Discussing the outlook for the market, Henin said that it will depend on geopolitical factors rather than companies’ financial results for the second quarter of the year. Elements like oil price fluctuations and whether a deal is signed between Iran and the US could determine market performance in the coming weeks, Henin said.
“I’m not expecting a lot of price movements following the second quarter results. The big question mark was after the first-quarter results — not now — because people then were hesitant to invest because they didn’t know what might be the impact falling oil prices that we saw in the fourth quarter of 2014,” he said.
Abu Dhabi Ship Building Co topped the gainers’ list with a 15 per cent increase in share prices, followed by International Fish Farming Holding Co (Asmak) with 9.59 per cent, Dana Gas with 6.52 per cent, and Abu Dhabi National Energy Company (Taqa) with 5.71 per cent.
Of the 34 stocks traded on DFM, 18 rose, nine fell, and seven remained unchanged. Of the 36 stocks traded on ADX, 18 rose, 13 fell, and five remained flat.