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UAE Shares Slide Amid Slumping Economy |
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12/26/2008 10:28:30 AM |
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UAE shares ended the week in negative territory, with both Dubai and Abu Dhabi posting their weakest finish since August 2004 as investors opted to cash out amid a deteriorating economy.
A late-buying surge in select stocks such as construction giant Arabtec Holding helped the Dubai Financial Market’s index regain some ground after marking fresh four-year lows earlier in the week , closing down 1.4 per cent lower to 1,587.08 with losses tallying 17.8 per cent this week.
"Shares in Arabtec, the country’s biggest construction company, jumped nearly 15 per cent to Dh3.99
Abu Dhabi’s gauge, dropped 1.91 per cent to 2,281.86 and lost this week a total of 15.67 per cent.
“Investors are worried about the economic slowdown in the UAE as a result of international economic downturn and liquidity crunch,” said Faisal Hasan, research head at Global Investment House.
The worsening liquidity shortage arising from the global financial crisis prompted the UAE central bank on Wednesday to offer dirham-US dollar swap facilities with maturities ranging from one week to 12 months, its latest effort to revive liquidity.
“In general such measures do have the tendency to ease liquidity issues,” said John Sfakianakis, chief economist of the Saudi British Bank.
But aside from such measures, investors also need to see other government responses to the decline in economic activity and from these “be able to get on with their spending and new projects,” said Hasan.
Emaar Properties which dropped more than 4 per cent in early trading, was able to pare its losses and end down 1.77 per cent to Dh2.21.
Shares in the Middle East’s largest property developer fell to a fresh four-and-a-half-year low in early trade following the company’s decision not to fully exercise a 10 per cent buyback program. The firm said the decision was in the best interest of its shareholders.
“Emaar management chose to use its cash to fund its projects rather than buy back shares because like other companies, borrowing money has become difficult,” said Amr Diab, sales head at EFG-Hermes Brokerage.
“Buying back shares to encourage investors to also buy the company shares is not a good idea especially when you need that spare cash to fund your operations. It was a good decision since it will be more beneficial for them to use that money to continue expanding its business, not only locally, but also its overseas projects.”
Investors are also increasingly growing anxious about the country’s growth prospects for 2009, said Vyas Jayabhanu of Al Dhafra Financial Brokerage. |
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Source:Khaleejtimes.com |
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