UAE shares keep heading south

Dubai The combined value of all the companies listed on the Dubai Financial Market has fallen by more than Dh240 billion in the last five months as real estate stocks started getting badly battered with the exit of foreign investors since early July and, lately, with retail investors selling off on worries of the sector's growth coming to a halt.

There is no sign that the huge falls in real estate stocks, which also include the largest construction company in the country, are coming to an end.

Emaar dragged Dubai's stock market down by more than five per cent on Sunday, extending this year's loss to a staggering 67 per cent. Emaar declined 9.75 per cent to end at Dh2.87.

Benchmark

The benchmark Dubai Financial Market General Index plummeted 5.92 per cent to close at 1,981.44 per cent. Bloomberg reports that it is the worst-ever seven-day slump for the DFM, which has declined 37 per cent.

Since July 1, the real estate index has come down from 11,206.7 to 2,931.51, a loss of 8275.19 points. And close to Dh80 billion has been wiped out from the listed companies in the sector.

Yesterday, some of the other big losers included Deyaar Development, losing 8.97 per cent to Dh0.71, Arabtec Construction, sliding 9.88 per cent to Dh3.01, Union Properties, shedding 9.60 per cent to Dh1.13.

Shares of the country's two mortgage giants, very much dependent on the real estate sector, also fell, with Amlak Finance declining 9.82 per cent to close at Dh1.01 and Tamweel closing 9.65 per cent lower to Dh1.03. The government is reportedly in favour of a merger of the two that would aid in tiding over the difficult credit situation.

Abu Dhabi, however, has managed to stem the huge losses it suffered earlier, and, in the past two trading days, has retreated a mere 1.82 per cent. The Abu Dhabi Securities Exchange Index ended 0.34 per cent to 2,755.62 with some of the real estate firms and banks gaining or trimming their losses. Among the stocks which ended in positive territory were Sorouh Real Estate, which gained 1.88 per cent to Dh2.71, First Gulf Bank, climbing 0.49 per cent to Dh10.30, Dana Gas, ending 2.78 per cent higher to Dh0.74.

Aldar Properties, which had gained 2.63 per cent on Thursday, declined 0.47 per cent yesterday to close at Dh4.28. Rak Properties remained unchanged at Dh0.67.

"The perception is that Dubai is going through a harder time than Abu Dhabi in general - the economy in terms of the real estate," said Sherif Mahmoud Salem, fund manager, asset management group, National Bank of Abu Dhabi. "Abu Dhabi companies seem to be more cash-rich than their Dubai counterparts."

Also, Salem adds, the negative news is coming out more from Dubai rather Abu Dhabi, which leads to more selling pressure on DFM. "The bearish sentiment prevailing on DFM is so overwhelming that the support levels could not hold the market [DFM]," said Shiv Prakash, equity investment analyst, technical at Mac Sharaf Securities. "If the same scenario persists, we are heading for new lows in the near term."

Lack of transparency on issues affecting the sector is a point reiterated by analysts every day.

"There is no clarity on what the extent of the problems are, how long it will last or what the solutions will be," Salem said.

Mover: Emaar at new low

Emaar Properties, the largest Arab real estate company and a heavyweight on DFM index, dropped to its lowest since September 2004, tumbling 9.75 per cent to close at Dh2.87.

And given the bearish trend in the market, the stock is headed south in the near term, says a technical analyst. "The chart points to a further slide in Emaar shares, which is expected to go down to Dh2.50 and then to Dh2.20 if the negative trend persists," said Shiv Prakash, equity investment analyst, technical, Mac Sharaf Securities.