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Shares Retreat on Profit-taking

DUBAI — Dubai shares retreated on Tuesday with investors cashing in on gains from Monday’s surge, as worries linger over Dubai’s debts despite the $10 billion support fund by Abu Dhabi.

The main index of the Dubai Financial Market slipped by 1.5 per cent to 1,843.27. The benchmark index of the Abu Dhabi Securities Exchange shed 0.9 per cent at 2,794.03.

Dubai’s top losers included low-cost carrier Air Arabia which fell by 7.8 per cent to Dh0.94.

Shuaa Capital, the country’s biggest investment bank, lost by 7.5 per cent to Dh1.61.

Bucking the decline was Dubai index mover Emaar Properties, rising by 3.1 per cent to Dh3.72. Emirates NBD, the UAE’s largest bank by assets, added 4.9 per cent to Dh3.45.

Construction heavyweight Arabtec Holding, gained 1.3 per cent to Dh2.29

“The initial euphoria on the Nakheel payment is yesterday’s chip wrapper, and we now have to trade on the restructuring story which could take months to come together,” said Matthew Wakeman, managing director of cash-and-equity-linked trading at 
EFG Hermes.

“The last few days felt like a game of musical chairs. The music stopped, with few chairs left for sellers to sit on, and the momentum is now negative going into tomorrow.”

The Dubai bourse soared by 10.4 per cent on Monday, after state-owned conglomerate Dubai World, said it will repay the $4.1 Islamic bond of property arm Nakheel PJSC. Dubai World is in talks with creditors to restructure $26 billion of its debts.

However, Dubai’s high debt level will remain a challenge for the emirate, said John Sfakianakis, chief economist at Banque Saudi Fransi-Credit Agricole Group. “While strong buying and a return of risk appetite are inevitable outcomes this week on regional markets, discerning investors will continue to exert some level of caution towards Dubai, and the wider region, in the short term.”

Sfakianakis said Dubai has more than $50 billion of debts reaching maturity in the next three years, and about half of these could be regarded as “bad debt.”

“The Dubai business model is clearly not viable going forward.”

Dubai-based logistics company Aramex, edged down by 9.6 per cent to Dh1.69. The Dubai Islamic Bank declined by 7.4 per cent to Dh2.30.

“The market is trying to build a base between 1,750 to 1,900. It will take some time to see a trend though, as the year is winding down, and investors do not want to take strong positions,” said Samer Al-Jaouni, general manager at Middle East Financial Brokerage.

rocel@khaleejtimes.com