Abu Dhabi: The UAE bourses plunged steeply on Monday with the Dubai Financial Market (DFM) index falling 4.38 per cent to reach 3,942.82, bringing its monthly loss to 22 per cent — the most since November 2008. Meanwhile, the Abu Dhabi Securities Exchange (ADX) general index declined 2.08 per cent to end at 4,551.02.
Construction giant Arabtec lost 10 per cent of its value, marking the maximum drop allowed per day, and ended the day with a share price of Dh2.61. Other Dubai powerhouses were also in the red as Union Properties went down 9.55 per cent, Drake & Scull International fell 10 per cent, and Dubai Investment Co slid 8.16 per cent. Additionally, Emaar dropped 3.67 per cent.
The decline in Dubai shares posts the biggest monthly retreat in almost six years.
The UAE central bank warned on June 8 that the country’s real estate market may be overheating, spurring the stocks’ first quarterly retreat since the three months ended June 2012.
Musa Haddad, equity fund manager at the National Bank of Abu Dhabi’s asset management group, attributed the drop in markets to seasonal trends, as well as political disputes in Iraq.
“Coming into Ramadan, we will continue seeing markets come down, and we’re expected to stay in that range of trading of 3,500 to 4,000 levels. But the longer term still looks positive,” he said.
Haddad added that DFM can only begin to incline once Arabtec discloses details about its corporate governance to shareholders, or financial results for the second quarter of 2014 come out. However, until such figures are out, markets are expected to trade in low volumes.
“At the same time, [we are] in a period of correction, so when there aren’t strong buyers in the market, the sellers would sell at a lower level to get out of the stock during that time. The macro picture of GCC markets, especially the UAE, hasn’t changed fundamentally; [the markets] are strong. This correction is natural,” the analyst said.
Commenting on the performance of Drake & Scull International, and Union Properties, which fell 10 per cent and 9.55 per cent respectively, Haddad said, “During the downside, when markets tend to correct, usually these high-beta retail-driven stocks will be hit because people will stay away from them, and be more into large blue chip companies that hold a little bit better.”
Of the 28 stocks traded on DFM, 25 went down, and three went up. Of the 30 stocks traded on ADX, 22 declined, four advanced, and four remained flat.
Originally published on http://gulfnews.com