Bloomberg News

Abu Dhabi Shares Drop to 3-Week Low on Europe Debt Woes, Oil

November 16, 2011

Nov. 16 (Bloomberg) -- Abu Dhabi’s shares retreated to the lowest level in almost three weeks, led by First Gulf Bank PJSC, on concern Italy’s new government will struggle to trim its debt and keep Europe’s crisis from spreading. Oil dropped.

FGB, controlled by Abu Dhabi’s ruling family, fell to the lowest level since Oct. 26 and Sorouh Real Estate Co. declined the most in almost a week. Abu Dhabi’s ADX General Index slipped 0.2 percent to 2,475.57, the lowest since Oct. 27, at the 2 p.m. close in the emirate. Dubai’s index lost 0.1 percent as the value of shares traded in the emirate slumped to the lowest since August 2004.

In the U.A.E. “low turnover and a lack of buying power will likely continue as long as the European crisis isn’t resolved,” said Sherif El Zeneiny, head of equity trading at National Bank of Abu Dhabi PJSC. Volumes will continue to drop as “there is no liquidity, we need a catalyst or the markets will remain fragile,” he said.

Standard & Poor’s 500 Index futures declined 0.8 percent at 7:56 a.m. in New York and the MSCI Emerging Markets Index decreased 1.1 percent. Italy’s 10-year bond yield rose above the 7 percent threshold that prompted Greece and Portugal to seek bailouts. Italy’s prime minister designate Mario Monti is due to meet with President Giorgio Napolitano to present his new government.

Trading Volumes

The value of shares traded in Dubai tumbled to 19.5 million dirhams ($5.3 million), according to data compiled by Bloomberg. Dubai’s benchmark DFM General Index, down 18 percent in the past year, has tumbled 84 percent from a high in 2005.

About 24 million shares traded today in Abu Dhabi, compared with a 12-month daily average of 64 million, according to Bloomberg data. The trading value fell to 41.2 million dirhams compared with this year’s high of 279 million dirhams on April 17.

“The only catalyst is the possible MSCI upgrade in December, which will boost market sentiment,” NBAD’s El Zeneiny said.

U.A.E. stock markets may be raised to emerging market status at MSCI Inc. next month after the company delayed the decision in June. Amendments to index constituents can alter share prices as passively managed funds buy and sell stocks to mirror the gauges. About $3 trillion of funds are benchmarked against MSCI’s indexes globally.

MSCI Reshuffle Outlook

MSCI will remove Sorouh and Aldar Properties PJSC, Abu Dhabi’s biggest developers, from its frontier market index as part of a semi-annual review, two bankers familiar with the changes said today. Sorouh retreated 1 percent to 98 fils, while Aldar was unchanged at 1.05 dirhams.

First Gulf retreated 1 percent to 14.95 dirhams.

Crude for December delivery sank as much as 1 percent to $98.39 a barrel on the New York Mercantile Exchange. Abu Dhabi holds about 7 percent of the world’s proven oil reserves.

Saudi Arabia’s Tadawul All Share Index decreased 0.1 percent, trimming its gain for the week to 0.1 percent. Oman’s MSM30 Index and Kuwait’s SE Unweighted Index also retreated 0.1 percent. Qatar’s QE Index rose 0.1 percent and Bahrain’s benchmark advanced 0.7 percent.

--Editors: Claudia Maedler, Susan Lerner

To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


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