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UAE Shares Drop as
Property Stocks Fall

DUBAI - Sagging property shares depressed indexes at both UAE bourses on Sunday, in spite of the government’s introduction of a liberalised, multiple-entry visa for foreign property owners that some analysts said could help stimulate the real estate market.

Stock in Emaar Properties, the country’s biggest developer, dropped by 2.97 per cent to Dh2.28 after Emaar reported on Thursday that its first-quarter profit had dropped by 74 per cent. Shares in Aldar Properties, the developer of the Ferrari project in Abu Dhabi, dipped by 1.5 per cent to Dh3.31, the company’s first decrease in three days.

The renewable multiple entry visa, which the government announced on Saturday, did not trigger adequate investor enthusiasm, as real estate indexes at the country’s two bourses fell. The Dubai Financial Market Real Estate Index tumbled 3.47 per cent to 2,443.58 points, bringing the slump in the past 12 months to 79 per cent. Abu Dhabi’s Real Estate Index lost 1.4 per cent.

The Dubai Financial Market General Index fell 1.28 per cent to 1,585 points, while Abu Dhabi’s ADX benchmark index dropped 0.3 per cent to 2,518 points. The worst financial crisis since the 1930s has weakened the Gulf’s once booming real-estate market as banks have curtailed mortgage lending and speculators have dumped assets. Home prices have almost halved since their peak in August 2008 and are at their lowest level since the second 
quarter of 2007.

“A weak session on low volume in the middle of a holiday weekend for European markets is no great shock and shouldn’t be over analysed,” said Matthew Wakeman, managing director of cash-and-equity-linked trading at EFG-Hermes. “There was clearly business on the sell side that needed to be completed and buyers sat lower. I’d expect a similar pattern to Monday’s session.” Wakeman said that the regional buying interest was focused on Qatar where the index performance so far this year has lagged GCC peers.

“We’ve seen earnings from many of the UAE large cap companies fairly quickly and that has raised the transparency and enables investors to make more informed investment decisions,” he added. “It’s fair to say results haven’t been great, but they haven’t been any worse than what was priced in 
at these levels.”

Dubai Investments dropped 2.1 per cent to Dh1.41, ending two days of gains. The company, which owns stakes in more than 40 companies, said first quarter net income dropped 45 per cent as property values fell.

“There will be a lot of caution this week in global markets ahead of Thursday’s bank stress test results in the US,” Wakeman said. “A lot of the impetus for the recent rally was underpinned by strength and stability in the financial stocks, so any negative surprises could prompt a kneejerk move lower and present buying opportunities to ride the next wave higher.”


abdulbasit@khaleejtimes.com