Abu Dhabi, Dubai: The row over Emaar's dividend may have a knock-on effect on the company's share price in the short term, according to market experts.

The property firm's annual general meeting descended into chaos after chairman Mohammad Al Abbar told shareholders they would only receive 20 per cent of the share's par value of Dh1 as dividend for 2006, down from a cash dividend of 40 fils a share in 2005.

"They've had excellent net profits, and giving us only 20 per cent is not the norm internationally," said a stockholder. "I would rather have put my money in fixed deposits a year ago, rather than taking a risk on a declining stock market."

With many investors owing interest on their loans taken out to buy Emaar's shares, a rewarding cash dividend was their only hope.

"About 20 to 60 per cent of any given portfolio is composed of Emaar, and the shares are mostly purchased through bank financing; hence this will result in pressuring the share price in the short term, as some investors might seek partial liquidation to settle the banks' dues,'' said Nabil Farhat, managing director of Al Fajr Securities.

Looking ahead

Shareholders initially demanded more than the offered 20 per cent cash dividend.

They refused several times to vote in favour of the payout, and were finally offered the option of rolling the dividend over to next year.

Al Abbar said the company thinks it is more important to invest in the long-term future of the company.

"I criticise most of the companies in other Arab countries, because they only work for today," he said, adding that Emaar needs to have adequate capital to seize opportunities in countries such as India.

By Ahmed A. Elewa and Robert Ditcham, Staff Reporters

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