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Equities End Week in Negative Territory

DUBAI — UAE shares capped the week in negative territory on broad-based profit-taking, as edgy investors cashed out ahead of the forthcoming Eid Al Adha holidays.

A downbeat outlook on the property sector by investment bank UBS, further dragged down property shares. Some banks bucked the trend following a statement by the UAE central bank that banks in the country were owed $2.9 billion by the troubled Saudi groups Saad and Algosaibi, and that their profitability after deducting provisions, would be reduced to Dh20 billion in 2009, compared to Dh26.8 billion.

The main index of the Dubai Financial Market slipped for a fifth session out of six, edging down by 0.8 per cent to 2,129.75, and losing 1.7 per cent from the previous trading week. The benchmark index of the Abu Dhabi Securities Exchange lost nearly a per cent at 2,924.56, and declined by 1.4 per cent from last week.

“Investors do not want to have full exposure ahead of the coming Eid holidays, while many are staying on the fence awaiting more clarity about issues that would dictate where the market will go,” said Samer Al Jaouni, general manager of Middle East Financial Brokerage. The holidays will be from November 28 to November 30.

The issues where investors want a firmer grasp, include the outcome of the mandated merger of mortgage providers Amlak and Tamweel, and Emaar Properties’ planned merger with the real estate units of another goverment-run company Dubai Holding.

Some investors are also opting to hold back positions pending details of the second $10 billion bond issuance by the Dubai government, the proceeds of which will go to the settlement of debts of state-run companies such as property developer Nakheel.

“We can expect trading to move sideways next week, as it will be mostly the day traders that will dominate the market. The lack of pertinent information related to the mergers and the bond issuance, are preventing foreign funds from pumping cash into the markets,” said Al Jaouni.

Emaar Properties, the country’s biggest property developer, edged down by 2.3 per cent to Dh4.33. Arabtec Holding, the largest construction company in the UAE, lost by 2.2 per cent to Dh3.12. Union Properties declined by 2.1 per cent to Dh0.93.

In Abu Dhabi, Aldar Properties, the emirate’s top-ranked property developer, edged down by 4.9 per cent to Dh5.46. Sorouh Real Estate dropped by 3.9 per cent to Dh3.13, while the smaller RAK Properties shed 2.8 per cent 
to Dh0.69.

UBS on Wednesday, forecast property prices in Dubai to fall further by 20 to 30 per cent.

It cited that new supply coming on stream may result in a supply glut of more than 25 per cent by the end of next year, with demand expected to 
be weak.

Some banks advanced despite a statement by the UAE central bank on Wednesday, that the banking sector’s profits this year, would be trimmed to Dh20 billion from Dh26.8 billion in 2008, as banks make higher provisions for loans related to the troubled Saudi conglomerates Saad and Algosaibi.

The Emirates NBD, the country’s largest bank by assets, rose by 1.5 per cent to Dh4.62. ”

rocel@khaleejtimes.com