Brokerages optimistic as money slowly creeps back into the local bourses, the Abu Dhabi Securities Exchange and Dubai Financial Markets.
Brokers are busy again as traded volumes in UAE rebound
Stockbrokers across the country celebrated yesterday as most revealed shrinking losses and some even recorded a rare profit as traded volumes more than doubled in the first half of the year.
"The country is back, the economy is stable. It's busy, you can see it in the hotels, restaurants and malls," said Nabil Al Rantisi, the managing director of brokerage at Mena Corp, an investment company based in Abu Dhabi. Mr Rantisi plans to hire 20 stockbrokers by the first quarter next year and has already recruited 11.
"The volumes are definitely higher and, with the consolidation of the sector, the market share among the remaining brokerages is growing," he said.
Brokerage firms have been suffering from depressed trading volumes on the country's bourses, the Abu Dhabi Securities Exchange (ADX) and Dubai Financial Market (DFM), after unrest in parts of the Middle East and North Africa region last year drove away investors. But trading activity and market interest improved this year, bringing some optimism for the flagging industry. Net consolidated losses for the quarter shrank to Dh34.36 million (US$9.3m) in the six months that ended on June 30, compared with Dh88.18m in the same period a year earlier, filings published on the Securities & Commodities Authority website show.
Traded value on the ADX rose to an average of Dh251m per day in the first half, compared with Dh124m last year. On the DFM, investors traded Dh251m in the first half compared with Dh175m a year ago.
Tumbling volumes forced 23 brokerages to shut down last year. Many of the independent securities companies have had their capital replenished and maintained the bare minimum as required by the market regulator: a trading manager and two brokers. There are 50 brokerages in operation from a peak of 103 more than two years ago.
"This year is completely different than last year," said Abdel Hadi Al Sa'di, the chief operating officer at Al Ramz Securities in Abu Dhabi. "At least there is no more bad news. Last year, the market was preoccupied with the Arab Spring and the euro-zone crisis."
The ADX General Index has risen 9.4 per cent so far this year to trade at 2,629.44, while the DFM General Index has risen 17.9 per cent, trading at 1,596.27 in the same period.
"For the UAE, there is a lot more to come, the opportunity is still there because we are still in the initial stages of rebound. We didn't recover like the Dow Jones or the FTSE, who keep hitting highs," said Mr Al Sa'di.
But others are not as optimistic.
"The vast majority are still not making money. The ones who are solely trading on the UAE exchanges are in a tough business at the moment, it's impossible to depend only on Abu Dhabi and Dubai," said Anastasios Dalgiannakis, the head of institutional trading at Mubasher Financial Services, based in Dubai. "In order for profitability of the industry to recover, you need consistently better turnover."