DFM up 7.8%, Daman more cautious than optimistic

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The Dubai Financial Market bounced into the New Year today with a 7.8 per cent gain on the first day of trading in 2009. But top broker Shehab Gargash, CEO of Daman Securities warned that he was still more cautious than optimistic about the year ahead.

‘I don’t know if we have hit bottom,’ he told me at a press conference today to launch Daman’s new independent UAE equity research compiled by Chicago-based Morningstar which will start on January 18th with six Dubai stocks.

‘It is a systemic issue reflecting a bigger crisis in the economy, liquidity and confidence. But stocks are the first thing to reflect problems and also the first to register solutions.

‘We are waiting for stern and resolute action by the government, government entities and even investors. We are still at a junction (and not sure which way it will go).’

He explained that one reason for the tie-up with Morningstar was to provide unbiased and impartial research not linked in any way to the broker’s own book.

Ironically this might indeed encourage business for this brokerage whose speculative fund managed a four per cent gain in the second half of last year, way ahead of the UAE markets which closed 58 per cent down for 2009.

The DFM looks particularly blown out with a 72 per cent crash in 2008 far worse than its 44 per cent correction in 2006. Market always find a bottom and the DFM fell just as sharply in 1999 but then moved in a trading narrow range until 2004, despite a hike in oil prices.