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Emaar heads losers as Dubai slips

A pull-back on global markets has given local short-term investors a sell signal.

August 4, 2010 8:59 by

Emaar Properties is the main drag as Dubai’s index gives up some of the previous session’s gains.

A pull-back on global markets has given local short-term investors, who dominate trade in the absence of institutional investors, a sell signal.

Emaar falls 0.6 percent and Aramex drops 1.7 percent as losers outnumber gainers five to zero.

“There’s money going back into Egypt and Qatar and to some extent Saudi Arabia, but UAE is bottom of international investors list in terms of the MENA region,” says Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading.

“Money is coming into regional stocks, but it is very selective and based on news flows – foreign investors are not just blanket buying the large caps and hoping the indexes will go up. They are doing their homework.”

Wakeman says UAE stocks will eventually entice foreign investors as a catch-up play if other markets extend gains, but for now, there are too many doubts surrounding the UAE economy.

“Until we get more (Dubai World) debt restructuring and some other question marks out of the way, we won’t see a massive return of investors to the market,” Wakeman adds.

In September, creditor banks will deliver their response to Dubai World’s $14.4 billion debt restructuring offer, while Nakheel’s creditors are expected to give their feedback on the developer’s separate restructuring plan by the end of August.

Dubai’s index falls 0.4 percent to 1,522 points.

Abu Dhabi’s benchmark edges up 0.01 percent to 2,537 points as only one of the four active stocks move. Waha Capital climbs 1.5 percent and accounts for nearly three-quarters of all shares traded.

Middle East markets are likely to be lacklustre on Wednesday, extending range-bound trading as world stocks and oil prices slip and few regional catalysts emerge.

Saudi Arabia has ordered at least one Blackberry service to be blocked from Friday as the spat between the smartphone manufacturer Research in Motion (RIM) and some Gulf Arab governments deepens.

The kingdom’s regulator failed to specify what service will be prohibited but the ban will hit Saudi mobile phone operators.

The United Arab Emirates said on Sunday it would ban Blackberry web browser, messenger and mobile email from October.

RIM’s shares fell 4 percent overnight and Saudi operators are also suffering, with Etihad Etisalat (Mobily) down 4.1 percent in two days and former monopoly Saudi Telecom Co (STC) also declining.

A slight pull-back in U.S. markets overnight may spur caution regionally.

The information flow has fallen into a familiar pattern as above-forecast earnings or other data fuel optimism, only for a fresh set of statistics to again cast doubt over the pace and strength of a global economic recovery.

Late Tuesday, data showed U.S. consumer spending and incomes were flat in June while home purchase contracts tumbled to a record low, implying an anaemic economic recovery for the remainder of this year.

Regional markets seem to be little impressed with global market moves anyway, while oil is also having a lesser effect on sentiment.

“People are hesitant and you can see that in the relationship between petrochemical stocks and oil prices over the past few weeks,” says a Riyadh-based analyst who asked not to be identified.

Oil has gained 14 percent since July 6, while the Saudi petrochemicals index is up 1.8 percent over the same period.

“That’s quite a big gap – usually they are much closer, with petrochemicals following oil’s movement – which shows people are getting jittery after being unhappy with petrochemical numbers in Q2,” says the analyst.

“With oil at $82, petchems stocks would normally be flying, but investors are hesitant.”

(Reporting by Matt Smith; Editing by Amran Abocar)

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