Tamweel shares down again

Tamweel shares dropped the maximum allowed 10 per cent once again today, minutes into the market’s opening as investors stuck with the shares for over two-and-a-half years flock to the exit door.

Shares in the Dubai-based Islamic mortgage lender resumed trading on the Dubai Financial Market yesterday and, as expected, slumped 10 per cent, triggering the circuit-breaker within minutes.

Share prices fell another 10 per cent today with just two trades executed, and are now at Dh0.802, down 19 per cent from yesterday’s opening at Dh0.99 (the level at which they were suspended in 2008).
 
Shares of Tamweel and Amlak, another Dubai-based Islamic mortgage firm, were suspended in November 2008 after an announcement that the two companies were planning to merge.

However, the subsequent real estate crash and a liquidity crisis saw the firms abandoning merger plans.

Tamweel, which had also stopped issuing loans, Tamweel resumed new mortgage lending earlier this year after Dubai Islamic Bank (DIB) took a majority stake of 57.33 per cent in the company in September 2010. The move effectively rendered Tamweel a subsidiary of DIB.

The country’s real estate market has undergone a sea change since Tamweel’s shares were suspended in late 2008, with property prices plummeting by an average 50 per cent and a surge in delinquencies.

Analysts expect shares to continue falling for a few sessions until a reasonable number of investors have managed to exit, before bargain-buying puts a base on the price.

Tamweel reported higher quarterly profits last week, from Dh5m in Q1 2010 toDh27m in the latest quarter. The mortgage lender booked impairment provisions of Dh16m dirhams in the quarter compared with Dh50.75m in the year-before period, it said in a statement. The company had annual net profits of Dh26m dirhams in 2010, from a loss of Dh54.4m in 2009.

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