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Property and banking shares crumble
With real estate and banking stocks being badly battered yesterday, UAE markets continued their decline with the indices losing a combined 4.56 per cent.
- By Gaurav Ghose, Financial Features Editor
- Published: 23:43 August 26, 2008
Dubai: With real estate and banking stocks being badly battered yesterday, UAE markets continued their decline with the indices losing a combined 4.56 per cent.
With Emaar declining 1.42 per cent to Dh9.00 at close - it had fell to a low of Dh8.95 during the day-and Emirates NBD dropping 4.50 per cent to Dh10.60, the Dubai Financial Market General Index fell 114.66 points or 2.38 per cent to end at 4,706.25.
Deyaar Development fell 2.14 per cent to close at Dh1.83. Union Properties shed 3.80 per cent to Dh3.80 while Dubai Islamic Bank closed 2.83 per cent lower at Dh7.21.
It was no different at the Abu Dhabi Securities Exchange. Led by substantial drops in Aldar Properties, Sorouh Real Estate, First Gulf bank, National Bank of Abu Dhabi and Abu Dhabi Commercial Bank the index slid 97.30 points or 2.18 per cent to 4,365.48.
Aldar lost 3.02 per cent to Dh9.63; Sorouh shed 2.60 per cent to Dh7.12; FGB slid 5.93 per cent to Dh22.20 and ADCB fell 4.20 per cent to Dh4.33. Dana Gas and Abu Dhabi National Energy Co dropped 4.65 per cent and 3.35 per cent respectively.
The combined market loss this week has been Dh24.96 billion. Foreigners continue to be net sellers and the reasons cited by analysts over the past few weeks still hold true.
"Some hedge funds, which have leverages on their contract or options trade, have to cover their positions or to book anywhere there is a profit. And having invested in the UAE at very low levels, they tend to go out at any time when they see an opportunity to book some profit," said Mousa Haddad, head of trade, discretionary mandate, national Bank of Abu Dhabi.
But there are others such as Shiv Prakash, equity technical analyst at Mac Sharaf Securities, who see that most of the positions in the market are leveraged and not fulfilling of margin requirements leads to a forceful liquidation of these leading to a panic fall in markets.
This week's fall in the UAE markets is also being attributed to the new rule in Saudi Arabia allowing foreign investors to buy shares. "One of the possible reasons is that people have moved to Saudi Arabia as we saw a sell-off after the swap agreement was announced," Haddad said.
The worries surrounding the real estate sector-the recent allegations of corruption against former officials, speculation being put to an end by compulsory registration of off-plan property sales and a possible drop in prices in Dubai by 2010 - are having an effect on stock prices.
In terms of technical analysis, Prakash said in his daily report, the DFMGI on the weekly chart "looks scary" as the strong neckline support of 5,000 marks is broken and the immediate support level is 4,650.
ADX looks "bearish," from the neckline resistance area and is facing selling pressure.
"We expect bearishness until 4,300 supports zones later can form sideways movement. Breakdown on 4,300 will be very bearish and can see 4,080 levels," he said. With regard to Emaar Properties, Prakash believes that it could fall further.
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