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Stocks Retreat as Property Shares Continue Downward Trend

Early strength at the Dubai Financial Market fizzled out towards the end of the session, with the benchmark index shedding 0.49 per cent to 1,518.58.

“Recent market resilience and volume in Dubai has been underpinned by retail buying into weakness on speculation that further stimulus or bailout announcements will be forthcoming,” said Matthew Wakeman, managing director of cash-and-equity-linked trading at EFG-Hermes. “But a justification to hold on to current levels was needed. Investors got restless, prompting the sell off into the close,” added Wakeman. Shares at the Abu Dhabi Securities Exchange retreated on profit-taking with the main index dropping 1.5 per cent to 2,354.11 as investors cashed in recent gains. Dubai index movers Arabtec Holding and Emaar Properties came under selling pressure. Arabtec, the country’s biggest construction company which recently announced a joint venture in Saudi Arabia, shed 4.11 per cent to Dh 1.63 after Monday’s strong surge. Investors shrugged off Emaar’s announcement that its unit in Egypt was spending 4 billion Egyptian pounds to develop three projects. The stock ended 3.88 per cent lower to Dh1.98.

Emaar disclosed to the Dubai Financial Market that “Emaar Misr is currently developing Uptown Cairo, Marassi and Mivida, which will see significant construction progress this year. It said funds will be raised through the sale of residential units and from reserves. Emaar Misr is also in talks about the terms of the home financing agreement with Amlak Finance and Egyptian Housing Finance Co.

“The positive news was outweighed by deeper problems hounding Emaar,” said Hesham Bakry, institutional sales manager at Al Futtaim HC Securities.

Emaar is being pressured by some of its investors to cancel some of its projects which are no longer considered viable amid the local
 property sector downturn.

Union Properties jumped 9.52 per cent to Dh0.69 per cent on speculation it sold some of its assets and was in talks for a possible merger with another property developer.

The Dubai Islamic Bank stayed in positive territory, rising 1.31 per cent to Dh2.32, ahead of the imminent merger of mortgage lenders Amlak Finance and Tamweel. Dubai Islamic Bank owns 20 per cent of Tamweel, while Emaar controls 45 per cent of Amlak Finance.In Abu Dhabi, Arkan Building Materials Co. dropped 9.94 per cent to Dh4.71.

Emirates Telecommunications Co, or Etisalat, the country’s biggest telecommunications operator, fell 2.01 per cent to Dh12.30. The Abu Dhabi Commercial Bank fell 3.45 per cent to Dh1.66 after UBS Investment research cut its target price for the bank to Dh1.80 from Dh.255, citing it is seeing a minimal loan growth of 4 to 5 per cent, while profit-and-loss impairments will be higher at 2.30 per cent by 2010.

rocel@khaleejtimes.com