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Dubai Shares Slump to 9-Month Low
DUBAI — Dubai shares slumped to its lowest level in more than nine months on Wednesday, wiping out its gains this year, as market confidence, already shaken by the emirate’s debt problems, got another pounding by property developer Nakheel’s first half losses of $3.65 billion.
Emaar Properties, the most heavily-traded stock at the Dubai bourse, construction company Arabtec Holding, and stock market operator Dubai Financial Market PJSC, all fell by 9.9 per cent.
The main index of the Dubai Financial Market dropped by 6.4 per cent to 1,533.36, its weakest finish since March 22 when it ended at 1,541.52. The Abu Dhabi Securities Exchange index lost by 2.8 per cent to 2,467.04.
At Nasdaq Dubai, Dubai World subsidiary DP World, the world’s fourth- largest port operator, closed down by 8.7 per cent at 31.5 cents.
Data provided by Gulfmena Alternative Investments showed that this week’s declines pushed the Dubai index into negative territory, with year-to-date losses of 6.3 per cent.
From January to the end of October, the index had gained nearly 40 per cent. The index has lost 26 per cent since the announcement by state-run Dubai World on November 25, that it was seeking a six-month delay in its repayments to creditors.
“What started as a crisis of confidence has escalated into panic selling, as many investors expected a resolution to this crisis. The market is now pricing in a default given that there is no guidance to the contrary,”said Matthew Wakeman, managing director at cash-and-equity-linked trading at investment bank EFG Hermes.
“Obviously a last gasp bailout package would bring cheer to local investors but international flow is severely damaged and will take time to return to Dubai,” he said.
Nakheel, the property arm of Dubai World, on Wednesday reported losses of more than $3.6 billion for the first half of 2009. Financial markets are on edge as they await what will transpire on December 14 when Nakheel’s $3.52 billion Islamic bond matures.
Dubai World, is negotiating with its creditors for a restructuring of $26 billion worth of debts, including $6 billion in debts owed by Nakheel.
“Nakheel’s losses only added fuel to the fire, that extra bad news says the company does not have the resources to pay its financial obligations,” said Marwan Shurrab, vice-president and chief trader at Gulfmena Alternative Investments.
Emaar, the UAE’s biggest property company, was downgraded to B1 from Ba2 by Moody’s Investors Service, which said recent comments by Dubai government officials indicated that not all state-linked companies enjoy the support of the government.
Arabtec Holding’s price target was cut to Dh3.33 from Dh4 by Credit Suisse Group AG which cited the builder’s exposure to Nakheel and other government-related entities.
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