DUBAI, 16 April 2006 — UAE shares fell to their lowest levels in more than three weeks yesterday as some investors sold Dubai’s Emaar Properties after its first quarter results failed to meet their expectations.
The main Dubai index ended 3.71 percent down at 653 points, its lowest close since March 23. The Abu Dhabi index dropped 1.09 percent to finish at 4,300, its lowest since March 16, according to Reuters data. “The decline was driven mainly by Emaar. I expect a recovery but the selling pressure will be there for a few days,” said Mohammed Yasin of Emirates Securities.
Emaar ended at 17.20 dirhams ($4.55), down 3.9 percent, and was easily the most heavily traded stock in Dubai, accounting for almost 40 percent of the 223 million shares that changed hands. Volumes were largely unchanged from Thursday.
The UAE’s largest listed firm reported a first quarter net profit of 1.5 billion dirhams after trading closed on Thursday, up 14 percent year-on-year and broadly in line with analyst forecasts. But brokers said that some investors had been betting on earnings of as much as 2 billion dirhams and sold Emaar shares when trading resumed yesterday. “There was a wave of panic selling early in the day and then some buying came in,” said Mohamed Alami of Naeem Brokerage.
Dubai-based Shuaa Capital had forecast Emaar’s first quarter net profit at 1.59 billion dirhams and Manama-based SICO Investment Bank predicted 1.4 billion dirhams. “Based on the results Emaar’s fair value should be around 18 dirhams,” said Yasin. “But speculators were dominating trading and they were looking to push the share down.”
Emaar is now trading at about 15 times forecast earnings, according to Reuters data, and 21 times 2005 earnings. The 52-week low of the share’s trailing P/E is 17. Emaar and its mortgage lending subsidiary Amlak Finance, which closed 1.17 percent down at 9.33 dirhams, account for around 50 percent of the traded value of both UAE bourses, and bearish mood in Dubai spilled into Abu Dhabi.