Shuaa posts Q2 loss as investments hurt
CEO sees pick-up in Q4.
August 11, 2010 8:55 by Reuters
Dubai-based investment bank Shuaa Capital posted a second-quarter loss, hit by a fall in the value of its investments and dwindling trading volumes.
Shuaa, in which the ruler of Dubai owns a 48.4 percent stake, said on Tuesday it swung to a net loss of 56.6 million dirhams ($15.4 million) in the second quarter from a 91.7 million net profit a year ago.
“Regional markets have experienced the lowest levels of trading activity since 2004 during the first half of the year and investor confidence has continued to weaken significantly,” chairman Majid Al Ghurair said. “We do not believe that these conditions can persist indefinitely.”
Turnover and trading volumes on the main exchanges DFM and ADX have slumped, extending a trend that started as the global financial crisis struck in 2008.
Daily average turnover on the Abu Dhabi bourse is 128 million dirhams this year, down from 280 million in 2009 and less than a seventh of 2008 levels.
Volumes on the Dubai bourse this year were on track to fall far below even last year’s turnover, a five-year low.
Shuaa attributed the quarterly loss to losses on the bank’s investments and heritage portfolio.
Chief executive Sameer Al Ansari said activity in the third quarter could continue to be slow, while a pick-up will happen in the fourth quarter.
“Our results are strongly influenced by investor sentiment and activity. Although Q3 is traditionally slow, we believe Q4 will see a tangible pick-up in activity,” Al Ansari said.
In February, Shuaa said it aimed to triple its fee income in the next three years, as it struggled to become profitable again.
(Reporting by Nicolas Parasie; Editing by Dinesh Nair and Jon Loades-Carter)