JEDDAH/DUBAI: Emaar Properties hammered Dubai’s index yesterday after clarifying its role in a Saudi project to build the world’s tallest tower, while most Gulf markets fell partly on declining global stocks.
Emaar fell 5.7 percent yesterday.
“The statement from Kingdom Holding was misunderstood, Emaar clarified its role in the project, this led to a reversal of the gains made in the previous trading session.” said Roy Cherry, Shuaa Capital vice-president for research.
“Emaar has been appointed supervisor on the project, against this service the company will charge a fee. As such it will not be exposed to the risks nor reap the full rewards of this project.”
Cherry said Emaar was likely to fall for a couple of days, but this was within the context of wider profit-taking after a recent rally on Dubai’s index.
Other Dubai property shares also declined, dragged lower by a Reuters poll forecasting Dubai house prices would fall a further 20 percent this year. Dubai’s index fell 2.5 percent, declining from Sunday’s seven-month closing high.
“We said in January that we expected property prices to fall 60 to 70 percent this year and the Reuters poll has re-emphasized that the correction is not over yet,” said Cherry.
“Most people in the market know this and so the poll underlines that existing perception and serves as a reminder, despite claims by recent third-party reports of the opposite.”
Kingdom’s weighed on Saudi Arabia’s index, which fell for the first session in five as investors sold blue chip stocks as oil fell to around $71 a barrel, retreating from an eight-month high as the dollar firmed and analysts said the market had rallied too quickly.
Oil’s rise has been a key factor in the recovery of Gulf Arab indexes, which, with the exception of Bahrain, have surged between 16 and 68 percent since the end of March, while oil increased 59 percent over the same period.
“Oil will stabilize between $60 and $70 and stocks should continue to go up,” said Mohammed Yasin, Shuaa Securities chief executive.
“Oil had a very strong effect on stocks when it reached $60, but since then it hasn’t been so important. The link between equities and oil is sentimental and is a self-fulfilling prophecy — people think they should sell when oil falls and buy when it rises and so prices move accordingly.”
A late rally enabled Kuwait’s index to end higher for a second straight session after Boubyan Bank jumped 8.2 percent to 0.53 dinars.
National Bank of Kuwait (NBK) has agreed to buy a 19.2 percent stake in Boubyan at 0.55 dinars per share from Commercial Bank (CBK) in a deal disputed by Investment Dar.
The Oman, Bahrain and Egypt benchmarks also advanced, but Abu Dhabi and Egypt fell. Shares in Asia and Europe declined. The benchmark Dubai index fell 2.5 percent to 2,143 points. The Abu Dhabi index dropped 1.4 percent to 2,923 points.
The Kuwaiti index rose 0.3 percent to 8,309 points, its fourth rise in five sessions, although all have been by less than 1 percent.
The Qatari index fell 1 percent to 7,292 points, its second reverse in three sessions. The Omani index climbed 1 percent to 5,653 points. In Saudi Arabia, the Tadawul All-Share Index (TASI fell 0.8 percent to 6,050 points, retreating from Sunday’s three week closing high.
With very weak liquidity, the market has faced strong downward pressure yesterday, with 5 sectors making gains, with the insurance sector leading the gains with 2.17 percent. On the losses front, 10 sectors posted losses ranging from 0.21 percent for telecom to 1.31 percent for banking and financial. Market breadth was negative, with 37 advancers and 79 decliners registering an AD ratio of 0.47., the Jeddah-based Financial Transaction House (FTH) said yesterday.
“The most important news the market is waiting for is the second quarter earning reports,” the FTH said in its market report.
The Bahrain index rose 0.5 percent to 1,594 points.
— With input from agencies
