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UAE stocks fall yet again
UAE stocks continued to slide, led by real estate and financials, as investor sentiment further dented amid poor earnings of Gulf companies and slump in global markets, both signs of the deepening of the worldwide financial crisis.
- By Gaurav Ghose, Financial Features Editor
- Published: 23:19 January 21, 2009
- Investors take a closer look at the monitor in Abu Dhabi. The Abu Dhabi Securities Exchange Index slipped 5.06 per cent to end at 2163.08.
- Image Credit: Ravindranath/Gulf News
Dubai: UAE stocks continued to slide, led by real estate and financials, as investor sentiment further dented amid poor earnings of Gulf companies and slump in global markets, both signs of the deepening of the worldwide financial crisis.
Yesterday's loss wiped out more than Dh16 billion in combined market capitalisation.
The benchmark US S&P 500 index and Nasdaq fell more than five per cent on Tuesday and Asian and European shares also tumbled, led by mounting losses of banks.
Closer in the region, the fourth quarter results of Saudi Telecom and Saudi Basic Industries Corp (Sabic) have left investors expecting the worst in the local markets. The two companies' net income dropped by 62 per cent and 95 per cent respectively.
"The big problem now is there is lack of confidence in the markets," said Mohammad Ali Yasin, managing director of Shuaa Securities.
"There is no positive news, whether internally or externally. People were expecting at the beginning of the year, liquidity crunch would ease off a bit and banks would start lending, but that did not materialise. The private sector is really suffering because they have lot of payments."
The benchmark Dubai Financial Market General Index declined 5.46 per cent to 1462.11, extending the week's loss to about 12 per cent. Real estate and financials were the worst performers, with Emaar properties and Arabtec losing nearly 10 per cent.
HSBC Holdings cut the estimate share price of Emaar by 39 per cent to Dh8.90 from Dh13.50. Shuaa Capital dropped 9.57 per cent, Emirates NBD retreated 4.96 per cent and Dubai Islamic Bank plummeted 9.04 per cent.
The Abu Dhabi Securities Exchange Index slipped 5.06 per cent to end at 2163.08.
Here, the sectors leading the loss were no different with the real estate index falling 9.25 per cent. Energy stocks shed 7.57 per cent and the banking index shed 5.05 per cent.
"Investors are thinking now the earnings will be far, far worse than their worst expectations," said Vyas Jayabhanu, head of Al Dhafra Financial Brokerage. "Emaar is looking for a Dh4 billion borrowing plan that illustrates that the major companies are having problems with liquidity. The magnitude of the liquidity problem is big. It's tough to get any loans."
Aldar Properties fell to its lowest level since its listing in April 2005, closing 9.62 per cent lower at Dh2.63. Sorouh Real Estate sank 9.54 per cent to Dh2.56. National Bank of Abu Dhabi and Abu Dhabi Commercial Bank slumped 8.44 per cent and 8.75 per cent respectively.
But it is also true that amid the overall gloomy scenario, the only investment platform that is properly functioning now is the stock market, said Yasin.
"If you go to banks, you don't get loans, and if you own real estate you can't sell it. The only place where you can sell and get your money is the stock market."
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