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Panic selling pushes Dubai stocks down |
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9/8/2008 10:04:32 AM |
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Panic selling sent the Dubai Financial Market to an 11-month low yesterday.
Emaar was the prime driver of yesterday's savage slump, falling to a 41-month low, while the DFM's General Index suffered its largest one-day reverse since late January. It dropped 4.64 per cent to 4,472 points after crashing through supports at 4,650 and 4,560 points to touch an intraday low of 4,397.
The culprits of the DFM's latest decline will be familiar to regular readers, with global economic woes, regional politics, subdued liquidity and real estate jitters all blamed.
The most decisive factor, however, was Saturday's 5.4 per cent decline on the Saudi Tadawul to take losses on the Gulf's largest stock market to almost 30 per cent this year.
"Global markets ended last week badly, while the Saudi bourse took a battering and this spilled over into the other Gulf markets yesterday," said Julian Bruce, EFG-Hermes director of institutional equity sales.
"The latest declines have triggered more margin calls that have only added to selling pressure, while fund redemptions have forced further selling.
"In the absence of the major local and regional investors, low liquidity has exaggerated the market decline."
Emaar plunged 7.98 per cent to Dh8.07, its worst finish since April 2005. The beleaguered property developer slipped to an intraday low of Dh7.88, triggering panic selling, while analysts warn Emaar has not fallen on such high volumes since April this year. It saw Dh417 million of shares change hands.
"Emaar enjoyed some late buying and should hold steady around the Dh8 mark, although some brokers are bound to have some residual sell orders from yesterday," said Bruce.
Dubai's turnover topped Dh1bn for the first time in seven sessions following heavy selling in Emaar, and the Dh1.1bn of shares changing hands was more than triple Wednesday's total and 43 per cent higher than that of Thursday.
"For the market to be in free fall on volumes of more than Dh1bn is bad news," said Wadah Al Taha, a senior analyst. "The index decline is exaggerated, especially compared to the performance of global markets - UAE firms are expected to again post excellent quarterly results, although those holding regional stock portfolios will suffer," he said.
EFG's Bruce also believes yesterday's sell-off was overdone and expects the market to settle down over the next few days. "Investors are worried Dubai's real estate sector may have peaked and that's having a knock on effect for all property-related companies in the UAE and, to a lesser extent, the rest of the region," he said. |
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Source: Zawya.com |
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