By: Mahmoud Gamal
Dubai – Mubasher: The Dubai Financial Market (DFM) ended February on a low note, weighed by strong selling throughout the month as investors turned their focus to cryptocurrencies, shrugging off the financial results season and the dividend distributions.
The DFMGI dropped 4.43% or 150.24 points to close the second month of 2018 at 3,244.42 points.
Digital currencies
February’s fall was mainly due to investors shifting their focus to what they believe might be more lucrative for them, commented Al-Safwa-Mubasher CEO Ehab Rashad, indicating digital currencies such as bitcoin.
Investors rushed to digital currencies even though many large companies reported strong results and positive dividend distributions, Rashad told Mubasher.
He noted that February saw lower turnover and trading both month-on-month and year-on-year.
The rise in oil prices and global equities earlier in the year was supposed to bolster the market’s turnover, however, this was not the case in February, Rashad added.
Turnover fell 34% in February to AED 4.67 billion from AED 7.07 billion in January, while turnover dropped 49.3% to 2.29 billion shares traded versus 4.52 billion.
The DFM’s market capitalisation declined in February to AED 389.67 billion ($106.07 billion) from AED 403.4 billion ($109.8 billion) in the previous month.
Rashad forecast that shareholder meetings, mainly in the banks sector, due in March may boost turnover for the month after they approve decent distributions.
Consumer staples lead losers
The consumer staples sector led fallers in February, sliding 12.7% after DXB Entertainment retreated 13.28% to AED 0.555 after the company reported widening its annual losses.
Moreover, the real estate sector fell 7.8% during the month, after DAMAC Properties dropped 10.4% to AED 3, while Emaar Properties declined 6.23% to AED 6.17, Union Properties shed 8.52% to AED 0.901, and Arabtec Holding fell 5.7% to AED 2.46.
The investment sector lost 7.13% after Dubai Investments tumbled 8.3% to AED 2.21, while DFM Company fell 2.67% to AED 1.
The banks sector was down 0.86% after Emirates NBD declined 1.66% to AED 8.85, while Dubai Islamic Bank (DIB) slipped 0.65%.
VAT impact
Many real estate companies and their subsidiaries suffered declines in February on the back of the value-added tax and the rise in geopolitical risks, said Raed Diab, head of investment research at KAMCO.
The companies in question include Emaar and its subsidiaries, DAMAC, and Union Properties, the analyst told Mubasher, attributing the fall in stocks to the sharp declines in profits for several of these companies.
Diab forecasts further drops in UAE indices in the coming months as many companies’ stocks will be impacted by the dividend distributions at a time when there are few market-boosting catalysts.
Translated by: Nada Adel Sobhi
