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UAE market hits six-month lows

Panic-stricken investors sold indiscriminately yesterday to cover their previous week's positions. The fall started with a few institutional investors offloading shares such as Emaar, Amlak and Tabreed in an attempt to take profits from their previous week's positions. The trading soon escalated into all-out panic selling which saw the Dubai Financial Market Index falling 4.89 per cent to 849.58 points.

The UAE benchmark National Bank of Abu Dhabi General Index fell 3.15 per cent (485) below the 15,000 mark and The Abu Dhabi benchmark index ADI dropped 2.93 per cent to 4,448.67 points, its lowest point since March 2005.

Last week, using technical analysis the Khaleej Times Business Editor had pointed out that the DFM index has broken through a key support threshold around 960 with the next level at around 768. From the beginning of this year the market has fallen over 22 per cent. Analysts say the current market P/E of 20 is indeed attractive, but small investors seem to be in no mood to hold out.

“What happened yesterday is pure panic. There is no rationale for such investor behaviour. Although there has been a liquidity flight to Saudi and Kuwait during the past few months, the valuations now are very attractive,” said Dhaheer Quraish, General Manager of Esshan's Securities.

“Fundamentally nothing much has changed in recent weeks. Saudi and Kuwaiti markets could go through a correction any time now which could bring back liquidity into the UAE,” said P. Krishnamurthy, a Dubai based analyst.

The market lost more than Dh23.4 billion in value yesterday as the total market capitalisation fell from Dh822.2 billion to Dh798.8 billion.

On DFM 13 most active traded stocks fell, and declining shares far outnumbered the gainers 14 to 3 yesterday. Emaar, the UAE's largest listed company, accounted for 45 per cent of the market volume of 107 million shares. The share closed 5.9 per cent down at Dh18.30. While Emaar subsidiary Amlak Finance fell 3.64 per cent to Dh8.70, Arab International Logistics and Tabreed dropped 4.29 per cent, 5.46 per cent respectively. In the banking sector, DIB fell 2.9 per cent to Dh27.75 as leading Abu Dhabi listed bank shares such as NBAD and Abu Dhabi Islamic Bank slipped 4.8 per cent and 5.4 per cent. In the services sector Dana Gas fell 2.05 per cent and Etisalat fell 1.7 per cent.