Dubai Shares Fall to Lowest Since June 2004 on Earnings Concern
January 15, 2012, 8:29 PM ESTBy Zahra Hankir
Jan. 15 (Bloomberg) -- Dubai’s benchmark stock index retreated to the lowest level in more than seven years on concern that full-year earnings may disappoint and after France and Austria were stripped of top credit ratings.
Emaar Properties PJSC, developer of the world’s tallest tower, fell 2.4 percent. Emirates Integrated Telecommunications Co. dropped to the lowest level in more than a month. The DFM General Index lost 1 percent to 1,314.47, the lowest since June 2004, at the 2 p.m. close in the emirate. The Bloomberg GCC 200 Index slipped 0.1 percent. In Egypt, the EGX30 Index, down 49 percent last year, climbed 1.7 percent.
“There’s some concern over earnings and momentum is very negative at the moment in United Arab Emirates markets,” said Ahmed Talhaoui, the Abu Dhabi-based head of investment and asset management at Royal Capital PJSC. “There’s no positive catalyst, so it’s difficult to see buyers coming into this environment” as European debt woes worsen sentiment, he said.
Emaar may report on Feb. 9 report a 27 percent drop in full-year earnings to 1.8 billion dirhams ($490 million), according to the mean estimate of 13 analysts compiled by Bloomberg. The company’s third-quarter profit fell 34 percent as revenue declined and property deliveries slowed. Income of developers in Dubai and Abu Dhabi suffered after real-estate prices tumbled by more than half since their peak in 2008. Emaar fell to 2.44 dirhams, the lowest since March 7.
Oil Declines
Standard & Poor’s cut France and Austria one level to AA+ from AAA last week and said they face the risk of further reductions. Spain and Italy were also among nine nations downgraded, while Finland, the Netherlands and Luxembourg kept their AAA ratings and were put on negative watch.
Crude oil for February delivery declined 0.4 percent to $98.70 a barrel in New York on Jan. 13, the lowest settlement since Dec. 21, after two European Union officials said an embargo on Iranian crude imports may be postponed for six months. The contracts dropped 2.8 percent last week. Gulf Arab oil exporters, including the U.A.E. and Qatar, supply about a fifth of the world’s oil.
Emirates Integrated retreated 1.4 percent to 2.85 dirhams, the lowest since Dec. 13. The U.A.E. phone company known as Du may report a 69 percent drop in fourth-quarter profit to 284 million dirhams, according to the median estimate of three analysts compiled by Bloomberg.
IMF Loan
In North Africa, Egypt’s benchmark index rose to 3,840.05, the highest since Dec. 15. A delegation from the International Monetary Fund will arrive in Egypt today to resume talks on a $3.2-billion loan, state-run Al Ahram newspaper reported Jan. 8, citing Finance Minister Momtaz El-Saieed.
“The market is up amid speculation the talks will lead to an agreement,” said Wafik Dawood, director of institutional sales at Cairo-based Mega Investments Securities.
Qatar’s QE Index and Abu Dhabi’s ADX General Index dropped 0.7 percent. Oman’s benchmark stock index declined 0.8 percent and Saudi Arabia’s measure was little changed. Bahrain’s measure gained 0.2 percent and Kuwait’s gauge rose 0.3 percent.
The TA-25 Index dropped 1.9 percent, the most this year, to 1,107.26. The yield on the 5.5 percent government bond due in January 2022 rose one basis point, or 0.01 percentage point, to 4.48 percent.
--With assistance from Ahmed A Namatalla in Cairo. Editors: Claudia Maedler, Daliah Merzaban
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
