The Dubai Financial Market, the only bourse in the region to trade its shares publicly, is likely to report more losses today after low trading volumes in the third quarter. Analysts at Deutsche Bank are even more pessimistic about earnings for the entity, which is traded as DFM Company, than they were just two months ago.
Rahul Shah, an analyst with the German investment bank, expects DFM Company to report a net loss of Dh9.4 million in the third quarter. DFM Company posted a net loss of Dh2.9m in the same period last year.
The analyst also trimmed his full-year earnings forecast. He now expects the company to report a profit of Dh17.3m for the year, down from a profit of Dh39.6m last year.
Third-quarter traded value for companies listed on the Dubai Financial Market reached a daily average of Dh90m, and Dh7.6m for the Nasdaq Dubai, a combined 51 per cent decline compared with the previous quarter. Average daily trading value on the Dubai Financial Market this month has been lower, at Dh71m, suggesting that DFM Company's fourth-quarter results may also be weak, Mr Shah said.
"The near-term fundamental outlook for DFM's business remains extremely challenging," he said. "Revenues are being hit by low levels of trading activity on the exchanges, with an additional drag on earnings from the acquisition of Nasdaq Dubai, which remains loss-making."
The integration of the Dubai Financial Market and Nasdaq Dubai is continuing, as indicated by the downward trend in operating costs at the group level, and the acquisition of the remaining 33 per cent of Nasdaq Dubai that the Dubai Financial Market does not yet own appears to be delayed, Mr Shah said.
The cash-rich DFM Company has been able to earn significant income from deposits with local Islamic institutions. However, the yield on such deposits has steadily declined.
DFM Company's shares have declined by 35 per cent this year.