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Mon 11 Aug 2008 01:11 PM

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Emaar leads slump in region's shares

UPDATE 3: Real estate companies are hardest hit as markets have day to forget across the Gulf region.

Gulf Arab stock markets slid on Monday as the dollar's rally led investors to book gains in dollar-pegged Gulf currencies as tensions mount over neighbouring Iran.

Real estate shares were big decliners across the Gulf region, with Emaar Properties, the largest Arab developer by market value, falling 1.49 percent to 9.9 dirhams, its lowest close in almost a year.

Emaar hit a session trough of 9.77 dirhams, barely over the 9.75 dirham level last seen in April 2005.

Oman's index took the biggest toll among bourses in the world's top oil-exporting region, falling 5.72 percent to a near six-month low of 9,536.73 points.

The index has fallen almost 13 percent in the last five trading days as blue chip stocks including Oman Telecommunications Co (Omantel) dropped more than 18 percent.

"People have seen the dollar's appreciation as an opportunity to liquidate positions which were built when the dollar was at lower levels," said Mohamed Abu Ghosh, an analyst at Qatar's Ahli Bank.

All Gulf states except Kuwait peg their currencies to the dollar, which hit a six-month high against a basket of major currencies on Monday.

Dubai's measure slid to its lowest close in almost 10 months while Abu Dhabi's index ended at its lowest level since January. Qatar's main index fell for a fifth day to a near four-month trough.

"Investors are panicking," said Jaysh Shah, head of brokerage at Bank Muscat.

"We are coming to see better valuations and this fall should be seen with the perspective of the rise in the first half of the year."

Many global investors had been piling into Gulf stocks and property on expectations that the booming oil producers might sever their links to the dollar or revalue as they battle record inflation.

Expectations of a shift in currency policy have receded since April and the dollar's broad global gains provided a good opportunity to sell shares that had rallied earlier this year, analysts said.

Investor sentiment in the region has been hit by news that Britain, France, Germany and the United States were considering imposing sanctions on neighbouring Iran over its nuclear programme, traders and analysts said.

First Gulf Bank, Abu Dhabi's second-largest bank by market value, has fallen 30 percent since July 2. The stock, which fell 9.46 percent on Monday, had rallied almost 50 percent in the first seven months of the year.

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Trojan 12 years ago

If you put 10 analysts in a room, you will get 10 different opinions. However, the one thing all analysts on Wall Street agree on is not to touch financial stocks. Banks in the US have "attractive" book value to market value ratios, does that make them an attractive buy? Apparently, not necessarily so according to these analysts. Just because Emaar dropped so much does not necessarily make it an attractive buy as Mr. Raslan claims. Past history is no indicator of future performance. The measures he is using are HISTORICAL, you have to look FORWARD. Your broker will make money whenever you buy and sell; you will be left holding the bag when your stock plummets. Beware!

SR 12 years ago

If something at all can be made of some of the comments of the ""analysts""; they really don't know what has happened!! For an example; "People have seen the dollar's appreciation as an opportunity to liquidate positions which were built when the dollar was at lower levels," Oh so has this happened overnight? Could'nt they have seen this coming then!! "We are coming to see better valuations and this fall should be seen with the perspective of the rise in the first half of the year." Ah only now that we have better valuations? Till now we were having what?? And the best of all: "Investor sentiment in the region has been hit by news that Britain, France, Germany and the United States were considering imposing sanctions on neighbouring Iran over its nuclear programme, traders and analysts said" As if Iran were not having any sanctions till date!! If I remember well this had been going on for the last 02 years!! Can you believe these guys??