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41983
Wed, 01/21/2009 - 15:54
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UAE markets fall to four-year low
Dubai, Jan 21, 2009 (WAM) - UAE markets tumbled to a four and a half year low on Tuesday - along with other Gulf bourses - as oil prices dropped further and the profits of the world's largest petrochemicals company, Saudi Basic Industries Corp (Sabic) plunged more than 95 per cent in the fourth quarter.
Crude prices dropped below US$33 a barrel in after-hour trading on New York Mercantile Exchange, raising fears among investors that government revenue among the Gulf states is likely to be adversely affected according to a report in “Gulf News.”
However, it was the fourth quarter results of Sabic, the world's largest petrochemicals company, which took analysts by surprise when its net income plunged 95.5 per cent to 311 million riyals. The company announced the closure of some plants and job cuts, as its share prices plummeted 9.8 per cent to 40.5 riyals, its lowest level since March 2004. The Saudi Tadawul Index declined 3.3 per cent.
"The Sabic figures are way below the expectations," said Haissam Arabi, chief executive of Gulfmena Alternative Investments, a regional specialist hedge fund company under formation. "Such results expectedly will create panic among the region's retail investors putting some more selling pressure for the next couple of days."
The Dubai Financial Market dropped 3.67 per cent to 1,546.57, led by real estate and banking and financial stocks. The Abu Dhabi Securities Exchange Index retreated 2.86 per cent to close at 2,278.42.
As UAE companies start to report their earnings, fears of more bad news has gripped investors.
"It is a moment of truth. Earnings are coming out and people are seeing the real impact of the global crisis on the region," Arabi said.
Shiv Prakash, equity investment-technical analyst of Mac Capital Advisors echoed Arabi's thoughts, pointing to falling oil prices. "The sentiments were very weak as oil prices witnessed a good sell off. Most of the [UAE] stocks broke their important support levels on the daily chart."
Arabtec and DFM company were among the first to be hit by the sell-off yesterday morning that gradually spread to other stocks, including Emaar Properties, Air Arabia, Aramex, Union Properties and Dubai Islamic Bank.
The Abu Dhabi index could not hold on to Monday's gain, with First Gulf Bank sliding 7.39 per cent to Dh7.39 and Aldar Properties declining 5.83 per cent to Dh2.91.
Crude prices dropped below US$33 a barrel in after-hour trading on New York Mercantile Exchange, raising fears among investors that government revenue among the Gulf states is likely to be adversely affected according to a report in “Gulf News.”
However, it was the fourth quarter results of Sabic, the world's largest petrochemicals company, which took analysts by surprise when its net income plunged 95.5 per cent to 311 million riyals. The company announced the closure of some plants and job cuts, as its share prices plummeted 9.8 per cent to 40.5 riyals, its lowest level since March 2004. The Saudi Tadawul Index declined 3.3 per cent.
"The Sabic figures are way below the expectations," said Haissam Arabi, chief executive of Gulfmena Alternative Investments, a regional specialist hedge fund company under formation. "Such results expectedly will create panic among the region's retail investors putting some more selling pressure for the next couple of days."
The Dubai Financial Market dropped 3.67 per cent to 1,546.57, led by real estate and banking and financial stocks. The Abu Dhabi Securities Exchange Index retreated 2.86 per cent to close at 2,278.42.
As UAE companies start to report their earnings, fears of more bad news has gripped investors.
"It is a moment of truth. Earnings are coming out and people are seeing the real impact of the global crisis on the region," Arabi said.
Shiv Prakash, equity investment-technical analyst of Mac Capital Advisors echoed Arabi's thoughts, pointing to falling oil prices. "The sentiments were very weak as oil prices witnessed a good sell off. Most of the [UAE] stocks broke their important support levels on the daily chart."
Arabtec and DFM company were among the first to be hit by the sell-off yesterday morning that gradually spread to other stocks, including Emaar Properties, Air Arabia, Aramex, Union Properties and Dubai Islamic Bank.
The Abu Dhabi index could not hold on to Monday's gain, with First Gulf Bank sliding 7.39 per cent to Dh7.39 and Aldar Properties declining 5.83 per cent to Dh2.91.
