The only publicly traded bourse in the GCC is connected to the worst-performing market in the region this year.
Sole publicly traded bourse in GCC suffers
The only publicly traded bourse in the GCC is connected to the worst-performing market in the region this year. Blame the fallout from the Dubai World restructuring or dried-up liquidity on the back of European woes but one obvious consequence of this all is declining revenues - as investors are well aware. Shares of the Dubai Financial Market, traded as DFM Company, fell yesterday for the third session in a row, closing 1.32 per cent lower at Dh1.49.
The bourse relies heavily on commission income for revenues but the chronic lack of liquidity has consistently pulled the trading value down at the exchange. Up to the end of the last week, the total trade value on the DFM this quarter was Dh16.7 billion, a 42 per cent drop on the same quarter last year. With just a couple of weeks before the second quarter ends, Ghida Obeid, an analyst at Shuaa Capital in Dubai, said she did not expect the trade value to go below the Dh20.7bn mark, which would still be 28.6 per cent lower than the first-quarter trade.
The Dubai Financial Market General Index is down 17.5 per cent so far this year while DFM Company shares have retreated 21.16 per cent over the same period. The shares have dropped 6 per cent this month and have fallen more than 42 per cent from their peak in October. Analysts say until investors regain their confidence and return to the trading floor, the fortunes are not going to change for the company's shares. "Continuing drop in trading value will impact the top line as fee income drops," Ms Obeid said.
DFM Company posted a first-quarter net profit of Dh53.6 million, a 39.3 per cent drop from Dh88m reported in the fourth quarter of last year. The company's full-year profits almost halved last year. Ms Obeid also said the additional fee income the DFM hoped to generate following the DFM-NASDAQ Dubai consolidation could be recorded in the third quarter this year. * with reporting by Hadeel al Sayegh