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Shares resume slide with Emaar leading the way

UAE stock markets resumed the losing streak on Monday, with sharp falls across the board following the Asian markets' downtrend, and a media report that local banks are resisting the latest interest rate cut of 75 basis points.

  • By Ahmed A. Elewa, Staff Reporter
  • Published: 00:22 January 29, 2008
  • Gulf News

  • All the leading shares recorded substantial losses, especially those more open to foreign ownership.
  • Image Credit: Gulf News Archive

Abu Dhabi: UAE stock markets resumed the losing streak on Monday, with sharp falls across the board following the Asian markets' downtrend, and a media report that local banks are resisting the latest interest rate cut of 75 basis points.

The market capitalisation fell by more than Dh19 billion as heavy losses prevailed, especially in Dubai where Emaar Properties plunged 5.75 per cent to Dh12.30.

"The dangerous thing is that Emaar is beginning to develop a downward trend to replace the upward trend that was taking shape," said Mohammad Beheiri, dealings and portfolio manager at Amanah Financial Services.

Dubai's benchmark declined 3.84 per cent to close at 5,451.05, while Abu Dhabi's general index fell less sharply by 1.14 per cent to 4,630.02.

All the leading shares recorded substantial losses, especially those more open to foreign ownership.

In Dubai, Dubai Financial Market's shares dropped by 6.83 per cent to Dh5.05, Amlak by 5.14 per cent to Dh4.43, Air Arabia by three per cent to Dh1.94, and, on top of all, du by 6.93 per cent to Dh5.51.

"It seems difficult to accommodate strong economic growth through interest rate cuts, and the irony is that, in dirham terms, if the currency is revalued against the dollar stock prices will fall to reflect the new reality," Beheiri said.

"Reports refer to a serious Saudi consideration of revaluing the rial next month, and if this occurs, UAE will surely follow, and this adds to the pressure, as investors need to hedge against such development," he said.

In Abu Dhabi, the strong gains in the energy sector cushioned the decline, with Dana Gas gaining 1.69 per cent to close at Dh2.40, and Aabar Petroleum advancing 1.12 per cent to Dh4.52. Nevertheless, the real estate sector continued to fall. Aldar Properties dropped by 1.44 per cent to Dh10.30 while Sorouh Real Estate fell by 1.55 per cent to Dh8.24.

The looming US recession prompts most economists to speculate that the US Federal Reserve will further slash the rates this week, a move that can further weaken the US dollar against major currencies, which affects export-oriented economies in Asia and other parts of the world.

"The UAE needs to seriously reconsider its rigid stance against revaluation," Beheiri said.

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