High-flying speculative stocks
are once again in play.
"Sentiment around the small cap speculative stocks
in UAE is very poor." Bhandari added.
Speculative trading, also called margin financing or speculative stocks
, is defined by Investopedia as 'stocks with a high degree of risk.
Mangun said retail investors would continue to trade second-liners and speculative stocks
which has been the trend for the last few weeks.
Later, retail-favourite speculative stocks
started coming under pressure with a number of them closing at their lower circuits, especially those within the overvalued food space,' he said.
Eagle Securities Head of Research Chris Mangun added that, "we will continue to see more action in second-liners and speculative stocks
as we wait out the foreign selling."
A few small speculative stocks
rose sharply including Al-Salam Group Holding, which gained 10.6 percent.
The report indicated that individuals and small financial portfolios targeted, in particular, speculative stocks
, but many of them engaged in noticeable sell-offs, fearing that the companies that have not publicized their financial statements might fail to do so within the remaining grace period.
"Traders are buying speculative stocks
to book a quick profit and either cash out or rotate into the blue chips." The majority of speculative insurance stocks retreated, with Al Sagr Cooperative Insurance slumping 4.4 per cent after it had jumped 8.1 per cent the previous day.
Blue-chip stocks (those with a market cap of greater than KWD 500 million) saw their ADTV increase by 11 per cent on average in 2014, and therefore the decline in trading activity was mostly centered on small- and medium-cap stocks, with speculative stocks
seeing the strongest decline in trading activity.
According to Shiimi ya Shiimi, SIM does not want to invest in speculative stocks
as their mandate is to safe guard investors' money.