EFG Hermes cuts Dubai equity market to underweight

  • Share via facebook
  • Tweet this
  • Bookmark and Share
STOCK DOWNGRADES: The analysts downgraded four Gulf bank stocks. (Getty Images)

STOCK DOWNGRADES: The analysts downgraded four Gulf bank stocks. (Getty Images)

EFG Hermes cut the Dubai equity market to "underweight" from "overweight," citing the high level of uncertainty after Dubai World asked creditors of two of its flagship firms for a standstill on debt worth billions of dollars.

EFG Hermes analysts said they estimated Dubai Inc debt totaled $120bn to $150bn, significantly higher than the consensus number of $85 billion.

The analysts downgraded four Gulf bank stocks and said Emirates NBD and Abu Dhabi Commercial Bank have the highest exposure to Dubai public lending.

"We believe that concerns over the solidity and value of the implicit state guarantee will raise borrowing costs," the analysts said.

Investors can find some attractive buying opportunities outside of the real estate and banking sectors, the analysts said.

The analysts raised their discount rate across UAE coverage by up to 400 basis points, bringing down fair value estimates by as much as 45 percent. (Reuters)

Related:
Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Further reading

Features & Analysis
Concerned for stability, Saudi Arabia tightens curbs on dissent

Concerned for stability, Saudi Arabia tightens curbs on dissent

Gulf kingdom intensifies crackdown on domestic dissent, raising...

Frustrated Kuwaitis ask, why is Kuwait falling behind?

Frustrated Kuwaitis ask, why is Kuwait falling behind?

Citizens wonder why oil producer Kuwait is not as dynamic a hub...

4
Saudi dynasty moves to forestall succession crisis

Saudi dynasty moves to forestall succession crisis

Appointment of Prince Muqrin as deputy crown prince is first...

Most Discussed