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UAE Shares Extend Losses

The government-owned group, which is seeking to delay repayment of a portion of its $59 billion in liabilities, issued its first major clarification about its restructuring plan in a statement to the Nasdaq Dubai.

Dubai World said its proposed restructuring is confined to the conglomerate itself and certain subisidiaries including property developer Nakheel World and Limitless World.

The conglomerate said it was in “constructive talks” with banks to restructure $26 billion of its debts.

In a shortened trading week, property and banking stocks continued to weigh on both UAE stock exchanges. The financial markets will be closed for a four-day holiday and will reopen 
on Sunday.

Dubai index heavyweight Emaar Properties was the biggest loser, declining by nearly 10 per cent at Dh3.38. Construction company Arabtec Holding slipped by 9.8 per cent to Dh1.38.

In Abu Dhabi, the emirate’s second-largest property developer Sorouh Real Estate plunged by 10 per cent to Dh2.56.

The main index of the Dubai Financial Market clawed back from steeper losses in early trade to finish 5.6 per cent lower at 1,831.48.

The benchmark index of the Abu Dhabi Securities Exchange also recouped some of its losses to end 3.4 per cent lower at 2,573.02.

“In the eyes of the stock investors it doesn’t matter that the restructuring amount is $26 billion rather than $60 billion. The fact remains that goalposts are being moved, and that is hurting confidence,” said Matthew Wakeman, managing director at cash-and-equity-linked trading at EFG-Hermes.

“But we are finding levels where investors are more comfortable buying and holding stock positions,” he said.

At Nasdaq Dubai, shares of Dubai World subsidiary DP World, the world’s fourth-largest port operator, closed 1.1 per cent higher at 37 cents. Dubai World said in its statement earlier in the day that DP World was excluded from the group’s restructuring plan.

Investment Bank UBS downgraded DP World to “neutral” from “buy,” saying that the parent firm’s debt concerns are bringing a higher degree of risk to the port operator. It cut its target price to $0.40 from $0.65.

“ Although DP World is not included in the debt restructuring, and we believe the company remains soundly recapitalised, uncertainty over the major shareholder is unlikely to be positive for the share price,” UBS said in a note to clients.

Reassurances by His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, about Dubai’s “stability” helped to ease panic selling that brought down the bourses on Monday.

Shaikh Mohammed’s comments were echoed by The President His Highness Shaikh Khalifa bin Zayed 
Al Nahyan.

“The Dubai World statement, along with comforting statements by the rulers, brought back some buyers. People are still edgy, which is why attention turned to defensive stocks,” said Marwan Shurrab, vice-president and chief trader at Gulfmena Alternative Investments. “Investors are realising that the entire markets have been punished, but now they are focusing on sectors where there are short-term trading opportunities.”

In Dubai, courier company Aramex rose by 2.5 per cent to Dh1.62. Low-cost carrier Air Arabia added 2.1 per cent at Dh0.96. Emirates Telecommunications Corp., or Etisalat, the country’s largest telecommunications provider, climbed by 1.5 per cent to Dh11.

rocel@khaleejtimes.com