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Dubai stocks drop as Abu Dhabi takes over mortgage lenders
Stocks in Dubai fell the most in a week as a takeover of the emirate's biggest mortgage lenders by neighbouring Abu Dhabi signalled a worsening crisis in financing real-estate debt.
- Bloomberg
- Published: 10:43 November 25, 2008
Dubai: Stocks in Dubai fell the most in a week as a takeover of the emirate's biggest mortgage lenders by neighbouring Abu Dhabi signalled a worsening crisis in financing real-estate debt.
Emaar Properties dropped 9.5 per cent, extending its slump this year to 83 per cent.
The Dubai Financial Market General Index retreated for a third day, falling 5.3 per cent to 1,814.90, sending the measure 69 per cent lower in 2008. The Abu Dhabi Securities Exchange General Index lost 3.4 per cent.
Abu Dhabi, backed by the largest sovereign wealth fund, is taking over Amlak Finance and Tamweel with backing from the UAE government, as the credit squeeze and lower oil ends Dubai's boom that drove development of the world's tallest tower and man-made palm-tree shaped islands.
"This confirms western investors' concerns about the deep downturn expected in the Dubai real-estate and property markets in the next two to three years," said Luis Costa, emerging- market strategist at Commerzbank AG in London. "It's not Armageddon for the Dubai real-estate market, it just needs to come back to basics."
Real Estate Bank, the Abu Dhabi-based lender that will take over Amlak and Tamweel, will be combined with Emirates Industrial Bank in a new entity called Emirates Development Bank, WAM reported on Tuesday.
Tumbling shares cut Amlak's market value by 80 per cent this year to Dh1.53 billion, while Tamweel has lost 86 per cent at Dh990 million. Both shares were suspended for a second day, pending the announcement of merger details.
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