Dubai: Property stocks witnessed a meltdown on Dubai bourse led by heavyweights like Emaar Properties, even as banks have been spared from the sell-off, triggering a near 2 per cent fall on Dubai index to its lowest level in five years.
The Dubai Financial Market general index fell to a low of 2,572.52, the lowest since 2013, before closing 1.97 per cent lower at 2,580.27.
“Such a continuous weakness with markets at a five-year low along with recent sharp correction in the index implies that margin calls is getting triggered on certain stocks. While near term its difficult to time the bottoming out, but we are definitely near the bottom now,” Nishit Lakhotia, head of research at Sico Bank told Gulf News.
Traders have been struggling to lock in gains on the Dubai index, which has been struggling for the past five after having lost 52 per cent. In fact the index has seen only one rally in 2013-14 in the past 10 years.
The traded value has also halved. Traded value stood at 30 billion shares so far in 2018, the least volume since 2013, compared to 60 billion shares in 2017. Traded value witnessed a peak of 120 billion in 2014.
The real estate sector has played a key role in this meltdown, with the UAE Central Bank noting in its quarterly report that realty prices have been on the back foot — the result of a softer job market that continues to weigh on housing demand.
Most of the weakness in the index could be attributed to Emaar Properties. Emaar Properties hit a low of Dh4.22, the lowest level in 2 years. Emaar Properties has been on losing streak for the past two years. Emaar Properties had been the most prized possession in a portfolio of traders, but the stock has been one of the leading losers. Emaar has been on a downward spiral ever since the company gave lower than expected dividend from its proceeds of partial stake sale in Emaar Development.
“Emaar has been on a losing streak since weak third quarter and it appears that ongoing sale of certain hospitality assets to Abu Dhabi National hotels is also not helping the stock’s fundamentals. To add to it, there is still no clarity on when the real estate prices will stabilise,” Lakhotia said.
Emaar Malls hit its lowest level since listing in October 2014, falling to as low as Dh1.70, down 3.41 per cent. Damac Properties closed 2.8 per cent lower at Dh1.73.
The Abu Dhabi Securities Exchange General Index gained nearly 1 per cent to end at 4,876.68 due to buying in First Abu Dhabi Bank (FAB) and Aldar Properties. FAB closed 2.47 per cent higher at Dh14.12. Saudi Arabia’s Tadawul index closed 0.50 per cent lower to end at 7,844.48,