Disappointing Property Losses Weigh Down UAE Shares

The Dubai Financial Market general index shed 1.05 per cent to 1,520.24 but days of advances enabled it to still gain 3.2 per cent from the previous week.

The Abu Dhabi Securities Exchange index retreated 0.2 per cent to 2,555.85 but also better off with gains of 19.6 per cent from last week.

“It was an encouraging day despite the falls. There were some specific weakness across sectors, but generally volumes picked up quite well.These are early signs of liquidity returning to the market,” said Ali Khan, managing director of Arqaam Capital.

With disheartening results of property companies, investors took solace from advances across global markets as hopeful investors cheered apparent progress being made by the US government in pushing its $825-billion stimulus package that aims to revive the world’s largest economy.

The Abu Dhabi-based Sorouh Real Estate, dropped 3.68 per cent after announcing a 91 per cent drop in fourth-quarter net income at Dh44.2 million.

Dubai index heavyweight Emaar Properties gave up 3.44 per cent to Dh1.96. Deyaar Development shed 1.85 per cent while Union Properties lost 1.63 per cent to Dh0.60.

Arabtec Holding, UAE’s biggest construction company currently building the world’s tallest tower in Dubai, continued its slide, dropping 4.13 per cent to Dh1.16.

Among property issues, Aldar Properties bucked the trend, adding 1.59 per cent to Dh2.58. Aldar reported late on Wednesday its fourth-quarter net profit plunged 84 per cent to Dh84.5 million.

While Sorouh and Aldar missed consensus estimates, “its important to look at the balance sheets of the real estate firms rather than just the bottom line,” said Matthew Wakeman, managing director of cash and equity linked trading at EFG-Hermes.

“Both Aldar and Sorouh look robust. Weak earnings were in the price and this is why we didn’t see a panic sell off today (Thursday).”

The country’s largest telecoms operator Emirates Telecommunications Co. shed 0.49 per cent to Dh10.20. Etisalat announced after trading its full-year net profit rose to Dh8.665 billion from Dh7.297 billion a year ago. It did not disclose its fourth quarter earnings.

Wakeman said the markets next week will continue to be volatile as investors “start to draw their own conclusions from the lack of company results on the tape so far.”

“The uncertainty remains more damaging than the reality.”

Some analysts though believe that there will be less surprises in the market with most of the negative factors already digested and declines if ever, won’t be that steep.

“Most of the bad news have been priced in. What will really make a big difference in sentiment is if there are actions by companies that will affect their balance sheet in the future, like if they cancel projects,” said Sherif Abdul Khalek, head of institutional sales at Beltone Financial Securities.

rocel@khaleejtimes.com