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Dubai Equities Retreat; Track Regional Declines

DUBAI - Dubai shares retreated on Wednesday, tracking a regional decline that hit property and banking stocks, and as concerns persisted about the debt restructuring plan of Dubai World.

Dubai index mover Emaar Properties, the Gulf region’s biggest property developer, dropped by 6 per cent to Dh3.59. Arabtec Holding, the country’s biggest construction company, lost 5.2 per cent to Dh2.18. Stock market operator, Dubai Financial Market PJSC, fell by 4.8 per cent at Dh1.79. Emirates NBD, the UAE’s largest lender by assets, gave up 4.9 per cent at Dh2.89, while the Dubai Islamic Bank, lost by 3.5 per cent at Dh2.23.

The main index of the Dubai Financial Market was unable to sustain early gains, slipping by 3.8 per cent at 1,735.70, its weakest finish since December 7 when the index closed at 1,744.83. The benchmark index of the Abu Dhabi Securities Exchange edged down by 1.9 per cent at 2,693.81.

“Investors typically want to cash positions before the Christmas holidays. The turnover is also low with most of the foreign funds out of the market, while those that want to offload stocks need to sell at lower prices,” said Marwan Shurrab, vice president and chief trader at Gulfmena Alternative Investments. At the same time, investors opted to wait for the outcome of Dubai World’s talks with its creditors for a debt standstill. The conglomerate said it would make a presentation to its creditors in early January on how it plans to restructure at least $22 billion worth of liabilities.

UAE capital Abu Dhabi last week, pumped in $10 billion to Dubai World, a move that prevented the emirate from defaulting on its debts. Part of the amount provided was used to settle a $4.1 billion Islamic bond by Dubai World property unti, Nakheel PJSC.

“The uncertainty surrounding Dubai’s debts will always be an overhang in the market. Investors are not going to take positions until there is more clarity about how Dubai World will deal with its debts,” said Shurrab.

Matthew Wakeman, managing director for cash-and-equity-linked trading at EFG-Hermes, said with Dubai falling for five straight sessions, the market is now at a level that better reflects the current environment, and “frees” up the market for some upward momentum from full year results.

“The Christmas period is always a volatile time for these markets due to the reduction in international flows. Smart money was buying into weakness today. Abu Dhabi has been more stable this week, and today’s surprising weakness will please many investors who missed the recent uptick and are looking for an entry point.”

Deyaar Development fell by per cent at Dh0.57, after it was reported on Wednesday by a newspaper that it halted merger discussions with rival Union Properties. Speculation about a union of the two Dubai-listed companies started last year, with both denying they were in talks. Shares in Union Properties fell by 4.3 per cent at Dh0.66.

“A merger between Deyaar and Union Properties would not necessarily have been considered good news. Existing shareholders would fear an open-ended lock-up, similar to Amlak and Tamweel. As for the merger itself, I don’t see the value in such a proposition. Besides Deyaar and Union Proeprties have always denied the talks,” said Roy Cherry, VP for research at Shuaa Capital.

In Abu Dhabi, real estate stocks also paced losers. The emirate’s biggest property developer Aldar Properties, shed 4.4 per cent at Dh5.02. Second ranked Sorouh Real Estate gave up 3.8 per cent at Dh2.52, while the smaller RAK Properties, lost bhy 3.4 per cent at Dh0.57.

rocel@khaleejtimes.com