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Mon 8 Dec 2014 05:34 PM

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Investors dump Emaar stock after securing dividend payout

Dubai's bourse, Emaar share price both fall to five-month lows as most Gulf stock markets decline on Monday

Investors dump Emaar stock after securing dividend payout
(Photo for illustrative purposes only)

Most stock markets in the Gulf fell on Monday after oil prices sank to new lows andDubai's index dropped as investors dumped shares in Emaar Properties , which had gone ex-dividend.

Dubai's bourse fell 3.3 percent to 4,031 points and Emaar tumbled 7.0 percent late in the session to 8.32 dirhams; both hit five-month lows.

While there was no fundamental reason for such a steep drop by Dubai's biggest listed property firm, the most likely explanation was a sell-off by investors who had held it for a dividend payout, said Shakeel Sarwar, head of asset management at Securities & Investment Co in Bahrain.

The record date for Emaar's special 1.257 dirham dividend was Nov. 30 and the stock has since plunged 21.5 percent. It has major technical support at 7.95 dirhams, the June low.

Most other Dubai stocks also fell, with the exception of low-cost carrier Air Arabia, which jumped 2.0 percent to 1.56 dirhams. The stock has gained 18.2 percent since the end of October, becoming a safe haven in an otherwise bearish market; it faces strong chart resistance at 1.65-1.68 dirhams, this year's peaks.

With fuel making up a significant part of Air Arabia's costs, the company stands to benefit from cheaper oil.

Abu Dhabi's bourse was mixed and its main index fell 0.9 percent. First Gulf Bank and Union National Bank fell 1.1 and 3.8 percent respectively, while National Bank of Abu Dhabi rose 1.6 percent.

Oman's bourse stabilised and inched up 0.1 percent after tumbling 4.2 percent in the previous session. Banking stocks, which had dropped when rating agency Standard & Poor's cut its outlook for Oman's credit rating to negative, rebounded with HSBC Oman and Ahli Bank up 4.5 and 2.0 percent respectively.

However, Raysut Cement, which had fallen its daily 10 percent limit on Sunday, dropped a further 3.2 percent. The firm said on Sunday that the price it paid for gas supplies would double next year, as the government responded to the oil price drop by cutting subsidies.

Saudi Arabia's index fell 1.7 percent as nearly all stocks in the key petrochemical and banking sectors declined.

Saudi Basic Industries dropped 3.0 percent and its subsidiary Yanbu National Petrochemical Co (Yansab), which last week proposed a dividend cut and announced plans to shut down a plant for maintenance, fell 1.3 percent.

Brent crude oil fell more than $2 a barrel on Monday to a new five-year low on predictions that oversupply would keep building until next year after OPEC decided not to cut output. Cheaper oil may eat into the margins of Gulf petrochemical producers, which have previously enjoyed cost advantages thanks to subsidised feedstock.

Oil importer Egypt's stock market rose for a fourth straight session, adding 0.5 percent. Carpet maker Oriental Weavers surged 6.1 percent to 60.00 pounds, its highest level since early 2006.

The company said last week it would launch two new carpet manufacturing plants and one plant to produce threads. The Daily News Egypt newspaper also quoted its founder Mohamed Farid Khamis as saying sales would grow 5.5 percent this year.

Shares in property developer Heliopolis Housing jumped 4.8 percent after its annual meeting approved a dividend of 1.0 pound per share, up from last year's 0.85 pound, according to Reuters data.

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Simon 4 years ago

If Kuwaits, Saudi and Iranian use of the terminology, 'lower for longer' is anything to go by then we can expect further declines in the DFM and ancilliary industries. The knock on effect to the Dubai Real Estate market will be significant and further price declines in the market can be expected.

Factor in the crash of the Russian Ruble against the USD/AED and you have another massive 'support' to the Dubai economy being eroded away.

Lets not forget that the Debt of 2008/9 has NOT gone away. It just gets rolled-over and pushed further out. That suggests the 'boom' was not a boom but a facade. Then factor in current cost of living and the debt burden of individual households...and...you start to see the picture.

Will we see the same crash as in 2008/9? no...my premise is that it will be far worse than before...driven from the West. All the facts are there to be observed. The writing is on the wall. Cash/Gold remain king. Leveraged debt is the killer...C/Cards, loans, Mortgs etc