Dubai Index down 5.4% year-on-year

UAE economy “doing well”, but Dubai Index shows decline

Dubai was the worst-performing Gulf Arab listing on the Dubai Index after “disappointing earnings” contributed to a 5.4% year- on-year decline on listings.

The figures, monitored between November 10, 2009 and November 10, 2010, were released last month.

Profits, said to have contributed to the drop, include those of Arabtec; with quarterly profits down 96% and Aldar, with 14 billion dirhams (US $3.81 billion) in debt maturing next year, according to Egyptian investment bank EFG-Hermes.

Overall, real estate prices in the emirate are down 58% from 2008 peaks and further declines of 11% are forecast due to oversupply and limited liquidity as more projects that broke ground in the boom are only just being completed.

“If global investors want to play the global cyclical trade, it doesn’t really exist in UAE markets,” ASAS Capital chief investment officer Robert McKinnon said.

“The UAE economy is actually doing quite well — hotel reservations are up, Emirates Airline posted strong results, for example — but we can’t invest in these companies and there is a big disconnection between the stock market and the real economy.”

“Performance is likely to split into two halves — Saudi Arabia, Egypt, Qatar and Oman should outperform and attract foreign investors, but Bahrain, the UAE and Kuwait will be laggards,” said Shakeel Sarwar, head of asset management at Securities & Investment Co (SICO) in Bahrain.

Developers in the emirate of Abu Dhabi are also said to be affected by the market in Dubai and over leverage.

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