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Bearish Spell Continues as Equities Drop on Losses, Debt Restructuring

Dubai Financial Market declined 0.2 per cent to 1,614.21 points, its lowest finish since January 31. The index is down 3.7 per cent in past two days due to speculation over Dubai World’s debt restructuring plans. Out of 28 stocks traded, 14 declined while seven posted gains in thin trading.

Property shares fell sharply following poor fourth-quarter results from major real-estate companies. Union Properties, a Dubai-based developer, retreated to the lowest level on record as it posted a full-year loss. Its shares retreated two per cent to Dh0.49, the lowest close since at least May 2001. Emaar, the UAE’s biggest developer, declined one per cent to Dh3.01.

Gulf Finance House tumbled 7.34 per cent to Dh1.01 as it announced $728 million net loss for 2009 compared to $292 million profit in 2009. Shuaa Capital shares remained bearish and declined 5.69 per cent to Dh1.16 while Arabtec Holding fell 2.31 per cent to Dh2.11.

“Poor numbers from Aldar and Union Properties weighed on the property sector across both indices today,” said Matthew Wakeman, EFG-Hermes Managing Director for cash and equity-linked trading.

“There was some residual selling post the Dubai World rumours over the weekend and yesterdays denial has done little to calm increasingly fragile nerves,” he said.

Abu Dhabi’s ADX General Index declined 0.58 per cent to 2,710.73 points, bringing the two-day drop to 1.2 per cent.

Aldar Properties, the Middle East’s second-largest developer by assets, fell to the lowest in almost seven months. Aldar declined 5.4 per cent to Dh3.69 after the developer reported a quarterly loss of $155 million as it failed to make any land sales.

“Bad numbers and outcomes are priced in at these levels but that doesn’t stop kneejerk selloffs like the one we saw in Dubai yesterday. Emaar’s strong Q4 results have yet to be priced in and any positive catalyst for Dubai should see an aggressive move for the stock but when is the key question, Wakeman said.

In banking sector, Abu Dhabi Islamic Bank dropped six per cent after reporting a $170 million fourth-quarter loss.

Abu Dhabi National Energy Company, or Taqa, lowered 1.6 per cent as its full-year profit plunged 90 per cent due to low oil prices.

“It’s not about the profit and loss statement at the moment — what’s important is the cashflow and what worried us more was the receivables,” said Robert McKinnon, ASAS Capital chief investment officer.

“There will be medium-term pressure on the stock as there’s not going to be a sudden turnaround in the real estate sector, but overall, we’re not too concerned about Aldar — it’s a sovereign company,” he said. 


muzaffarrizvi@khaleejtimes.com