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The Dubai Financial Market (DFM) Company saw its net profits dip last year on the back of low trading values.
The listed stock exchange reported a net profit of 120.6 million UAE dirhams ($32.8 million) for the financial year ending December 31, 2019, down by 4 percent compared to the 125.5 million ($34.2 million) recorded in 2018.
“[The profit drop] is due to the decline of total trading value [last year],” a spokesperson told Zawya on Monday.
Despite the slump, the DFM’s board of directors has proposed a cash dividend of 200 million UAE dirhams ($54 million), which is equivalent to 2.5 percent of the company’s capital.
DFM’s total revenues for last year also declined to 315.8 million UAE dirhams compared to 324.7 million UAE dirhams in 2018.
The last three months of 2019 generated 742 million UAE dirhams in total revenues for the company, up 2 percent from the same period in 2018. Net profit for the period also jumped 15 percent to 25.1 million UAE dirhams.
In its latest financial results, the DFM said trading values tumbled by 12.5 percent to 53 billion UAE dirhams ($14.4 billion) last year.
According to Raghu Mandagolathur, executive director of investment management and research company Markaz, there was poor investment sentiment last year due to regional and geopolitical uncertainties.
“The 2019 drop in revenues and net profit for DFM General Index, attributable to fall in trade volume, is a by-product of an inactive domestic IPO market and the ongoing regional and geopolitical uncertainties. This has dampened domestic investor sentiments,” Raghu told Zawya.
However, DFM maintained that the market continues to draw growing interest from foreign investors.
“The market remained attractive to foreign investment. Foreign investors’ transactions generated net purchases of 2.824 billion UAE dirhams and they acquired 49.6 percent of market activity, with an ownership of 17.35 percent of total market capitalization,” Essa Kazim, the DFM Company chairman, said in a statement.
He also pointed out that the DFM General Index increased by 9.3 percent during the year 2019.
In March 2007, seven years after commencing operations, the DFM became a public joint-stock company, following the listing of its shares and an initial public offering (IPO).
DFM’s total revenues for last year also declined to 315.8 million UAE dirhams compared to 324.7 million UAE dirhams in 2018.
The last three months of 2019 generated 742 million UAE dirhams in total revenues for the company, up 2 percent from the same period in 2018. Net profit for the period also jumped 15 percent to 25.1 million UAE dirhams.
(Writing by Cleofe Maceda; Editing by Seban Scaria)
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