Emaar Properties' share price yesterday hit a five-year low of Dh1.74 during intraday trading as investors digested the news that the developer will not pay a dividend for 2008. The price rebounded, however, and closed marginally higher at Dh1.88.
Analysts said Emaar's decision to hold dividend was the right one.
"The decision to maintain liquidity in the company was a wise move because the company will continue to face difficulties in financing its projects," said Mohamad Al Beheiri, trading manager at Amanah Financial Services. "The decision had a marginal impact on the stock because it is at very low levels and this was clear in the quick rebound in the stock after it hit a historic low."
Sherif Abdul Khalek, institutional trading manager at Beltone Financial, explained the early intraday decline in the stock price came due to pressures from retail investors who were disappointed by the dividend decision.
Shiv Prakash, equity investment analyst at Mac Capital Advisors said Emaar's stock has faced continuous selling pressure from the time it broke the important support level of Dh9.70. It fell to the lower level of Dh1.74 yesterday.
"Fundamentally, Emaar looks very cheap but the future growth seems to be under pressure because of the tough economic conditions and that is the reason there is no buying interest in the stock at lower levels."