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Shares Drop in Volatile Trading

DUBAI — UAE shares dropped for a second day in volatile trading on Tuesday, with markets taking their cue from tumbling world equities worried about the strength of economic recovery, and as investors turned cautious ahead of the US Federal Reserve’s two-day monetary policy meeting.

Dubai index mover Emaar Properties declined by 7.3 per cent to Dh4.05. Stock market operator Dubai Financial Market PJSC, the only listed bourse in the Gulf region, lost 9.4 per cent to Dh2.11. Construction giant Arabtec Holding fell by 6.2 per cent to Dh3.04.

The main index of the Dubai Financial Market edged down by 5 per cent to 2,075.46. The benchmark index of the Abu Dhabi Securities Exchange was down by 1 per cent to 2,947.80.

“We are seeing excessive volatility because of the high correlation between our markets and the international markets. With most of the earnings results already out, investors are again looking at external factors for guidance,” said Haissam Arabi, chief executive officer of Gulfmena Alternative Investments.

Major markets worldwide were lower on Tuesday, with investors taking little comfort from news that US manufacturing accelerated at its fastest pace in more than three years. Investors will also be eyeing the statement of the US Federal Reserve after it decides on whether or not to keep its key interest rates steady.

The local markets were also pushed lower by retreating oil prices. On Tuesday, New York’s main contract, light sweet crude for December delivery, dipped 75 cents to $77.38 a barrel. Brent North Sea crude for December delivery shed 71 cents to $75.84 per barrel.

Member countries of the Gulf Cooperation Council control about 40 per cent of the world’s oil supply.

Most real estate and construction related stocks, along with banks, weighed on both bourses.

Dubai-based Drake & Scull International, shed 4.7 per cent at Dh1.01, a day after it posted a third quarter net profit of Dh71 million. Deyaar Development edged down by 5.2 per cent to Dh0.73, while Union Properties gave up 6.1 per cent at Dh0.93.

In Abu Dhabi, property market leader Aldar Properties lost 4.9 per cent to Dh5.20. Second-ranked Sorouh Real Estate declined by 4.4 per cent to Dh3.16, while Ras Al Khaimah Properties shed 1.4 per cent to Dh0.71.

Shuaa Capital, the UAE’s largest investment bank went down by 6.6 per cent to Dh1.69. Moody’s Investors Service on Monday upgraded the foreign currency and local currency issuer ratings of Shuaa and assigned a stable outlook. The ratings agency cited Shuaa’s conversion of Dh1.5 billion notes into equity that was issued to the Dubai Banking Group, as well as signs of gradual improvement in the investment environment in the countries in which Shuaa operates.

It said however, that any further uplift to the ratings is constrained by the vulnerabilities of Dubai, and the structural funding problems faced by government-related entities.“Previous rallies were quite strong and investors want to take money off the table for a bit. This is a healthy consolidation, it will give investors time to reassess valuations and take new positions before the fourth quarter results,” 
said Arabi. Emirates NBD, the country’s biggest bank by assets, fell by 4.8 per cent to Dh4.18. Dubai Islamic Bank edged down by 6.4 per cent to Dh2.78.

Abu Dhabi Commercial Bank bucked the trend, its shares jumped by 6 per cent to Dh2.08 on speculation it is close to resolving its row over loans with the Saudi-based conglomerates Saad and Algosaibi groups.

· rocel@khaleejtimes.com