Bourses react to debt restructuring

Dubai and Abu Dhabi: Dubai and Abu Dhabi bourses closed down 7.30 per cent and 8.25 per cent respectively on Monday, their largest one-day losses in over a year as investors reacted to Dubai World’s request to delay a debt payment.

A sell-off was seen across the board with the Dubai Financial Market index closing at 1,940.

In Abu Dhabi, all sub-indices were down, led by real estate, telecommunication, energy, construction and banking stocks, which dragged the ADX general index down to 2,669.95.

National Bank of Abu Dhabi’s (NBAD) announcement earlier yesterday that it has a $345 million (Dh1266 million) exposure to the Dubai World Group also weighed on investor confidence.

"There was heavy selling pressure in the market today and there were virtually no buyers," Musa Haddad, Head Trader with the National Bank of Abu Dhabi Asset Management, told Gulf News.

Details

"Since everyone is selling, no one is interested in buying. The uncertainty will continue until details of the restructuring emerge," he added.
Etisalat and NBAD were the two most heavily traded shares on ADX.
While four million shares of etisalat worth Dh41.8 million were traded, 2.7 million shares of NBAD worth a combined Dh33 million were traded.

Shares of etisalat fell 1.10 per cent to close at Dh10.20. NBAD’s shares fell 1.30 per cent to Dh12.10. Yesterday, 27.91 million shares cumulatively worth Dh112.56 million traded on the ADX. Of the 34 companies traded, only one rose and 33 fell.

Abu Dhabi National Co. for Building Materials (Bildco) was the day’s sole gainer, its shares rising 0.95 per cent to close at Dh2.12. Sharjah Islamic Bank fell the mos, falling 10 per cent to Dh0.90. Etisalat was the most actively traded by value, and Agthia was the most active by volume.

"On the downside, the ADX may test 2,550 and the Dubai market 1,800 levels. In the absence of buyers, the share prices tend to get lower and lower," said Haddad.

"Dubai needs cash to pay back some of its debts. For that, it will have to draw upon either its own cash resources or liquidate some of its assets or take recourse to fresh debt. This is what my economic wisdom says," said Mohammad Amerah, an Abu Dhabi-based economist.

In Dubai, of the 27 stocks traded, 25 fell and two closed unchanged. Arabtec fell 9.77 per cent to Dh2.77, and developer Emaar fell 9.86 per cent to Dh3.75.

Trading on the Dubai Financial Market (DFM) totalled less than Dh37.48 million, the lowest ever for one day’s trading.

Dubai Islamic Bank fell 9.96 per cent to Dh2.44. DFM stock lost 9.68 per cent to Dh1.96.

Drake and Scull International fell 9.90 per cent to Dh0.91 and Air Arabia lost 9.62 per cent to Dh0.94. Emirates NBD faired better, falling five per cent to close at Dh4.37. The bank, largest by market cap, is believed to be directly exposed to substantial Dubai public lending.

The highest loss was seen by Gulf Navigation, closing down 10 per cent at Dh0.63 and Shuaa falling the same to close at Dh1.53. There were no gainers yesterday.

The bourse saw 18 out of 32 stocks ending limit down, the maximum amount by which a stock can fall in one trading session.

The session saw volumes and trades at their lowest this year, with only 23 million shares traded at a value of Dh37 million.

During Wednesday’s session, the last before the Dubai government’s debt restructuring announcement and the Eid Al Adha holidays, 163 million shares were traded for Dh278 million.

"Attractive buying opportunities will emerge within Dubai and Abu Dhabi over the coming weeks, but the timing will depend on the news flow that emerges over the considerable closed periods ahead.

"We expect the hardest hit sectors to be banks followed by real estate, while buying opportunities should arise first in the limited number of ideas that trade outside of these sectors," said investment banking firm EFG-Hermes.

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