DFM downgraded after poor Q2 trading

Morgan Stanley has downgraded its rating of the Dubai Financial Market due to disappointing trading in the second quarter of 2008 and the belief that the market is still optimistic on the stock.

“With the average daily traded value of the market now close to the bank’s forecasted ‘Bear scenario’ of $400 million, Morgan Stanley has lowered its DFM traded value forecasts for 2008 and 2009 by 39%,” Morgan Stanley said in an emailed statement on Wednesday.

“The market remains too optimistic, in our view, with earnings forecasts implying 65% year on year growth in trading values, in contrast to our forecast of 17%. Bearing in mind the special circumstances that drove the strong Q4 2007 figures we see further downside risk to DFM’s price,” said Tammam El Barbir, a banking analyst at Morgan Stanley

As a result, Morgan Stanley has lowered its price target to 4.13 dirhams from 6.32 dirhams.

“This cut represents the higher cost of equity to reflect low earnings visibility, lower profit growth in maturity phase, no cash and investment related income and lower average daily traded value forecasts,” added El Barbir.

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Downgrading of DFM Forecast
Posted by Jack, Dubai on 17 July 2008 at 13:05 UAE time


Hhhmmm...could this mean that those with property look to make up their portfolio shortfall with even higher rents...

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