UAE markets continue to slide despite good valuations

Abu Dhabi: UAE markets on Sunday continued their downward spiral, draining an additional Dh17.7 billion in capitalisation.

The Emirates Securities general index retreated 3.27 per cent to 3,695.70, accumulating more than 38.5 per cent in losses since the beginning of the year.

"These are very attractive price levels, yet still the local investor is reluctant to step into the market in such bearish times, when foreign funds are withdrawing and the international markets are plunging," said Mohammad Ali Yasin, managing director of Shuaa Securities.

In Dubai, the general index was dragged down 4.5 per cent by the heavy losses suffered by market leaders such as Emaar Properties, which nose-dived to its maximum limit of 10 per cent to close at Dh5.13. Other major real estate developers followed suite, with Deyaar Development plunging 8.26 per cent to Dh1.11, and Union Properties falling 9.91 per cent to Dh1.91.

The banking sector was driven down by the leading financial companies.

Tamweel fell sharply by 9.88 per cent, followed by Amlak Finance which dropped 9.73 per cent.

Government rescue

Some analysts are suggesting that the government can provide some rescue through staged trading by its investment arms and funds, while many are optimistic that the assurances by President His Highness Shaikh Khalifa Bin Zayed Al Nahyan and the decision taken by the Cabinet, headed by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, will yield fruit.

"In a country such as Germany, or any other developed economy, the sizes of banks exceed that of the financial capacity of the government, and there can be a serious problem. But in the UAE, the case is reversed, and here lies the real importance of govern-ment interference," Yasin said.

In Abu Dhabi, the drop was more moderate. The general index was down 2.3 per cent to 3,133.51.

Nevertheless, the relatively modest losses recorded by the National Bank of Abu Dhabi, and Abu Dhabi Commercial Bank, of 2.86 and 4.68 per cent respectively, limited the overall losses incurred as a result of steeper declines recorded by banks like First Gulf Bank or Abu Dhabi Islamic Bank, which plunged 9.33 and 7.31 per cent respectively.