Leading the two-day drop in Dubai are construction and property index heavyweights Arabtec Holding and Emaar Properties, both falling more than 4 per cent. The benchmark index of the Dubai Financial Market edged down by  2 per cent to 1,720.86. The Abu Dhabi Securities Exchange’s main index shed 0.4 per cent at 2,625.47.  Trading was thin with the total value of shares in Dubai at  Dh347.4 million, lower compared to the 50-day average of Dh957 million. In Abu Dhabi, volume traded totaled Dh149.6 million compared to the  50-day average of Dh413.9 million.

Arabtec, the country’s biggest construction company, lost 4.2 per cent to Dh2.54. Emaar, which said on Monday it closed its development office in Algeria after planned projects did not progress, retreated by 4.6 per cent to Dh2.48. Construction and engineering company Drake & Scull International lost 3.4 per cent to Dh0.86. Deyaar Development gave up 5.4 per cent at Dh0.70. Union Properties slipped by 2.3 per cent 
to Dh0.87.

“We can expect lower volumes during the summer months, and more volatility,” said Bobby Sakar, equity research analyst at Al Mal Capital.

“The chief concern of investors is the potential impact of the second quarter results. With overall fundamentals not changing all that much, there seems to be consensus that earnings would
 be subdued.”

Analysts said stocks will continue to be under selling pressure as the stronger dollar is also putting pressure on commodity prices. Crude for August delivery fell $2.97 to $63.76 a barrel in electronic trading on the New York Mercantile Exchange on Monday as dismal unemployment figures from the US  and Europe last week cast doubts about global  economic recovery.

“Buoyant commodity prices are vital for emerging markets to outperform, especially oil for our region. All equity-related asset classes are taking a breather in the run-up to second quarter results, as investors want to see evidence of earnings growth rather than speculating on it. The inflated levels that we saw just a few weeks ago had priced in the unknown and that proved unsustainable in the current climate,” said Matthew Wakeman, managing director of cash-and-equity-linked trading at EFG-Hermes.  Among banks, Emirates NBD, UAE’s biggest bank, shed 0.6 per cent to Dh2.48. Dubai Islamic Bank fell by 1.3 per cent to Dh2.31. Ajman Bank declined by 2.8 per cent to Dh1.05. The Islamic bank said it signed a Dh54 million loan agreement to develop the Ajman free zone.

“Investors are going to want to see the impact of UAE banks’ exposure to the two troubled Saudi groups, and that their provisioning as a result, won’t take too much out of their profitability. But until the results are known, trading in bank stocks will be sideways to flat,” said Haissam Arabi, chief executive officer and fund manager at Gulfmena Alternative Investments.

In Abu Dhabi, natural gas producer Dana Gas fell by 2.7 per cent to Dh1.03. Abu Dhabi National Energy Company rose by 2.1 per cent to Dh1.4. The company said on Monday its Canadian unit bought 10,000 hectares of land containing shale gas in Horn River for $56 million. Among property stocks, market leader Aldar Properties edged lower by 2.2 per cent to Dh3.56. Second-ranked Sorouh Real Estate declined by 3.4 per cent to Dh2.50, while RAK Properties finished 2.7 per cent lower at Dh0.70.


rocel@khaleejtimes.com