(MENAFN - Khaleej Times) Dubais bourse suffers 6.
despite recent drops the dubai financial market is still up 19 per cent year-to-date. — kt file photo
uae equities on tuesday fell sharply as property and construction shares plunged in volatile trading ahead of the holy month of ramadan next week.
the dubai market suffered its biggest losses in many months as investors continued to offload shares in arabtec holding which triggered a chain of margin calls that forced a broad sell-off in the market.
the dfm general index tumbled by 6.7 per cent the most since august to 4009.01 points as 12 stocks lost more than nine per cent amid speculation that leveraged traders are liquidating positions. the market was tumbling as much as 8.7 per cent at one stage but recovered a bit during the last trading session.
the main index has now tumbled 26 per cent from a multi-year peak hit in may erasing roughly 30 billion of value. the index is still up 19 per cent year-to-date.
the abu dhabi market fell 3.44 per cent to close the day at 4547.59 points its biggest drop since january 2011 with eight stocks limit-down. dana gas shares plunged 10 per cent to dh0.63 while methaq adsb gcem and arkan lost more than 9.5 per cent of their values in broad bearish market. trading volumes stood at 220.59 million.
“the reason for the extended fall is most likely margin calls on a number of stocks and continued selling pressure witnessed on arabtec. markets are being driven by retail and momentum players and volatility is likely to remain over ramadan and over the summer period” saleem khokhar head of equities at national bank of abu dhabi’s asset management group told khaleej times.
“from a fundamental standpoint valuations are attractive and if investors are able to withstand currently volatility then they should add to positions gradually over the ramadan and summer period” he added. khokhar said fundamentally the outlook for market is good but “we are being driven by retail and momentum investors and volatility is likely to remain in the short term”.
shailesh dash chief executive of al masah capital management said the market has come under heavy selling pressure this week with the dfm falling to the 4000 level from 4500 points.
“month-to-date the market is down more than 20 per cent. we attribute this to four things. firstly summer is now upon us and investors tend to step away during this time causing volumes to dry up and makes movements more volatile since there is less market depth” dash told khaleej times.
secondly he said ramadan is due to begin next week and is typically a slow period with low volumes due to the shorter working hours and investors will lighten up their market exposure in anticipation.
thirdly the iraq situation is bringing caution to foreign emerging markets investors who view the middle east as one market and don’t want to have political exposure due to the memories of the arab spring.
lastly the market has had a great run this year climbing to as high as 60 per cent in early may for the year and now people are taking profits given the other three reasons.
“we view this as a good buying opportunity as the market is presenting good entry points for trades and adding to existing and new positions. this decline has been exaggerated with indiscriminate selling across the board trowing promising companies out along with the less promising ones” he said.
arabtec was a catalyst for tuesday’s sell-off as the stock was the first to go limit-down. its shares dropped 9.8 per cent to dh3.12 — the lowest since january after the company confirmed it cut staff. the company’s shares tumbled by 53 per cent so far this month following aabar investments decision to cut its stakes in the uae’s largest listed builder. arabtec shares are still up 52 per cent this year so far.
emaar properties fell 3.4 per cent to dh8.50 while deyaar development lost 10 per cent to dh0.963. union properties dropped 9.95 per cent.