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UAE real estate stocks plunge, dragging benchmarks
About Dh29 billion has been wiped off the UAE's stock markets in two days of steep losses that left them at lows last seen more than four years ago.
- By Gaurav Ghose, Financial Features Editor
- Published: 11:17 December 22, 2008
Dubai: About Dh29 billion has been wiped off the UAE's stock markets in two days of steep losses that left them at lows last seen more than four years ago.
And the coming days do not look good, say some analysts.
"Real estate and the banking sectors are facing a tough time with many [loan] defaulters. With the realty sector facing a major correction, the near term story for UAE market looks negative," said Shiv Prakash, equity investment analyst at Mac Sharaf Securities.
The real estate and banking sectors have been among the worst performers this year.
The slump in oil prices, which fell below $40 (Dh147) this week, is also likely to weaken region's economic growth, aggravating the already frayed sentiments of the investors.
At the close of business yesterday, the Dubai Financial Market General Index closed 3.91 per cent lower to 1,732.20. The benchmark has slumped about 71 per cent this year. Abu Dhabi Securities Exchange lost 2.88 per cent to end at 2,502.22.
Union Properties, which announced that it is seeking to sell bonds worth Dh2.5 billion to its "strategic investors", tumbled to its lowest in almost six years, closing at Dh0.87, down 8.42 per cent. The latest move illustrates that project financing is still difficult and liquidity shortages are far from over.
"It had no alternative but to go for bonds to mop up funds," said Prakash. "Banks are very cautious in lending and credit squeeze is still very much a problem. And I cannot say that there will be any price appreciation of Union Properties because of its latest move."
Shuaa Capital, the largest investment bank in the country, fell for the eighth day, plunging 9.65 per cent to end at Dh1.03. The bank sought approval of extending the maturity of their convertible bonds to next month.
Emaar Properties, the largest property developer in the region, dropped 4.94 per cent to Dh2.50. The stock has fallen about 15 per cent in the past three days. Arabtec, the largest construction company in the UAE, was the biggest loser, tumbling 100 per cent to Dh4.23.
In Abu Dhabi, Aldar Properties lost 8.08 per cent to Dh4.21. First Gulf Bank and Abu Dhabi Commercial Bank slid 9.25 per cent and 7.69 per cent to Dh8.24 and Dh1.80 respectively.
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