Dubai tumbles; most Gulf stocks hit milestone lows
Dubai, December 8, 2009
Dubai's index slumped to a 21-week low on Monday as nervy investors sold stocks in the absence of any concrete news on Dubai World's debt woes, while similar worries sent other Gulf Arab bourses tumbling to milestone lows.
Dubai fell 6.2 per cent to its lowest finish since mid-July and it has fallen 22 per cent in the five trading sessions since Dubai World asked for a debt standstill as it attempts to sort out $26 billion of debts.
Abu Dhabi dropped 3.4 per cent to a 31-week low, Saudi Arabia slumped to its lowest finish since mid-September, Oman returned to August levels and Bahrain hit a two-year low.
'Foreign investors are selling again -- they have a big fear of what is going on in Dubai,' said Adel Nasr, United Securities brokerage manager. 'Foreign institutions treat all Gulf markets as one market so they are selling everywhere.'
After market hours, ratings agency Moody's downgraded six Dubai-linked issuers including Emaar Properties and DP World and analysts warn further declines on UAE markets are likely.
'We don't have enough information and investors are worried Dubai's problems could be bigger,' said Samer al-Jaouni, General Manager of Middle East Financial Brokerage Co.
UAE stocks collapsed in sluggish trading, with Emaar Properties, Dubai Islamic Bank and Arabtec all losing more than 9.8 per cent.
'Volumes are low, but that's because stocks hit their limit down, so the market essentially stopped trading 1.5 hours before the actual close,' said Jaouni.
'There were offers, but no buyers. Without the 10 per cent stock movement limit, the market would have fallen further,' Jaouni added.
DP World, the flagship company of Dubai World, recouped its early losses after the Dubai finance chief said the ports operator was able to meet its obligations and was performing well.
The firm's shares ended flat, having been down 5.5 percent before Abdulrahman al-Saleh's remarks, but other Dubai stocks were little moved.
'You can usually take the view that no news is good news, but in Dubai's case it's quite the opposite - investors need to hear some developments on Dubai World's restructuring,' said Julian Bruce, EFG-Hermes director of institutional equity sales.
'Selling is likely to continue unless we get a strong view the market is oversold and that Dubai World will put an acceptable restructuring in place.'
Saudi Arabia's index fell 2.3 per cent, its biggest one-day decline for five weeks and lowest close since September 16.
Investment companies were the biggest losers on Oman's Index, which fell to a 15-week low as investors fretted over firms' possible exposure to Dubai's debt crisis.
'Oman has many listed investment companies that have money in Dubai, so investors believe they will be affected,' added United's Nasr.
Kuwait's index made its largest one-day gain for four months after the country's prime minister agreed to be questioned by parliament in what would be the first time the head of an Opec member country's government would undergo the process.-Reuters