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Shares Post Moderate Losses

DUBAI - Dubai shares posted moderate losses on Thursday, with lingering concerns over Dubai’s debt problems, stifling investors’ appetite for risks.

The most heavily-traded stock Emaar Properties, which gained 31.7 per cent in four trading sessions, fell for the first time this week, shedding 
 0.8 per cent to Dh3.95.

The main index of the Dubai Financial Market posted a marginal 0.6 per cent loss to 1,879.26. The index was 14.5 per cent higher from the previous trading week, mainly due to the 10 per cent rise last December 14, when UAE capital Abu Dhabi injected a $10billion support fund to Dubai to prevent it from defaulting on its debts.

The benchmark index of the Abu Dhabi Securities Exchange was barely changed to 2,774.27, it gained 10.8 per cent from last week.

“The debt problems are ongoing, and will be an overhang for this market well into next year when we will hear about the restructuring process,” said Matthew Wakeman, managing director at cash-and-equity-linked trading 
at EFG Hermes.

“Many of the large caps are now flirting with pre-debt concern levels, and as such investors have made some good money this week. Breaking through these levels will imply that we are in better shape than before Dubai World’s announcement—and that simply isn’t the case.”

Investors, while cheering Abu Dhabi’s move last Monday, remain cautious as state-conglomerate Dubai World start earnest talks next week with its creditors over the proposed restructuring of $26 billion of its debts.

The announcement on November 25 by Dubai World, calling for a six-month delay on the repayment of its debts, have rattled global financial markets, as investors worried that Dubai will default on its loans, and UAE sovereign ratings will subsequently, be downgraded. The $10-billion Abu Dhabi support has helped 
calmed markets.“Sentiment is still very strong, but investors are pricing in headline risks, Dubai’s debt problems are fully-priced in, the markets are stabilising, but investors are also looking for additional catalysts,” said Ali Khan, managing director at Arqaam
 Capital Limited.

“Investors will be keeping an eye on fourth quarter results, which 
should be encouraging.” Construction heavyweight Arabtec Holding, shed 0.8 per cent at Dh2.38. Contractor and engineering company Drake & Scull International, was steady at Dh0.92. Shuaa Capital, the country’s biggest investment bank, lost 0.6 per cent at Dh1.56.

In Abu Dhabi, Aldar Properties, the emirate’s biggest property developer, added 1.3 per cent at Dh5.37. Goldman Sachs assigned a ‘buy’ rating on Aldar, saying the restructuring of Dubai World shifted the focus of real estate and construction from Dubai to Abu Dhabi.

—rocel@khaleejtimes.com