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Dubai slumps, TASI fails to maintain positive streak
Oil prices also fall on slower growth in China and euro zone worries.
June 2, 2010 8:41 by Samuel Potter
Saudi Arabia’s benchmark on Tuesday fell 2.5 percent unable to maintain Monday’s positive streak as investors sold petrochemicals stocks amid falling oil prices.
Most Middle East markets declined as oil prices dropped 3 percent to $72 per barrel and world stocks fell as expectations that slowing growth in China and the euro zone would hamper the global economic recovery.
The Tadawul All-Share Index (TASI) ended the day with losses in all sectors. ranging from 0.53 percent in both Retail and Energy & Utilities to 3.29 percent in Petrochemical Industries.
Yanbu National Petrochemical (Yansab) fell 5.2 percent and index heavyweight Saudi Basic Industries Corp (SABIC) dropped 3.1 percent.
Overall market breadth was also negative, with 7 advancers and 127 decliners, recording an AD ratio of 0.06, the Financial Transaction House (FTH) said in its daily market commentary.
“After yesterday’s run up we were expecting stocks in the petrochemical sector to trade in line with commodity prices. The sector is the worst performing sector in the region today,” said Ali Khan, managing director and head of brokerage at Arqaam Capital in Dubai.
Dubai’s benchmark index slumped to a five-month low on Tuesday after a heavy loss from Dubai Holding’s main unit, Dubai Holding Commercial Operations Group (DHCOG), sparked concerns that the emirate’s debt troubles were far from over.
Dubai’s index fell 3.1 percent to 1,531 points to touch a five-month low in a sell-off led by real estate stocks.
“Foreign investors are away from the market and a major part of what we are seeing today has to do with the announcement from the Dubai Holding unit,” said Samer Al-Jaouni, general manager for Middle East Financial Brokerage Co.
“I believe we are seeing negative sentiments widening further in the region.”
Real estate stocks took a beating, with market heavyweight Emaar Properties falling 6 percent. Developer Deyaar dropped 7.4 percent and Union Properties ended 6.5 percent lower.
UBS analyst Saud Masud said concerns that the Dubai Holding subsidiary would add more units to the property market was the main cause of concern for the sell-off in property stocks.
“The amount of pipeline that they plan to bring into the market (about 21,000 units) and when you take into account that Nakheel is going to add more units, it is going to create significant over supply in the market,” he said.
Abu Dhabi’s index fell 2 percent to 2,553 points, its lowest level since December.
Aabar Investments fell 5.5 percent. The company may increase its recent $800 million loan with local and international lenders to $2 billion to refinance debt, bankers said.
Qatar’s index bucked the downtrend in regional and global markets to end up 0.7 percent at 6,833 points.
“The prices are not very attractive for sellers and we don’t have any major concerns in the economy unlike some of the other regions. Also, banks in the region are at a comparatively better position, despite the slowdown,” Jaouni said.
Oman’s index falls 1.3 percent to 6,210 points as risk-averse investors hold back from making new buys.