Massive losses on UAE markets

The UAE stock markets lost more than 121.24 points between them yesterday as investor anxiety prompted further selling.

Worries over a deepening United States recession and its implications for the wider global economy, together with heightened regional tension, have frightened investors, both retail and institutional. These problems pushed the Dubai Financial Market down 1.32 per cent to 5,223 points yesterday, its lowest close since mid-January and its ninth reverse this month alone.

Meanwhile, the Abu Dhabi Securities Exchange fell 1.04 per cent to 4,889 points, meaning it has declined in seven of the past nine sessions. "The current situation is critical," said Wadah Al Taha, a senior financial analyst. "There is a continuous lack of confidence, which is the result of two factors – sustained declines of major global exchanges, principally the US and UK markets, and regional instability.

"These factors are being illogically exaggerated by investors, causing them to ignore the second-quarter results, which have generally been very good. DFM Company, First Gulf Bank and Amlak Finance have all posted decent figures, yet this has had little effect on their share price."

The DFM has endured an awful July, with its General Index plunging 5.7 per cent, while the ADX has lost 3.06 per cent over the same period.

The Dubai index is in greater peril and slipped below the critical support of 5,200 mid-session yesterday, before mounting a limp recovery.

It faces further declines unless daily turnover tops Dh1 billion for several sessions running, Taha said. Yesterday's trading was worth Dh865 million. "To have a solid trend, big stocks with sound fundamentals should lead the market, with a turnover sufficient to create supporting levels," Taha said.

"The flow must also be into the major stocks – currently around 40 to 50 per cent of Dubai's turnover is in Ajman Bank, which is pure speculation and we cannot depend on this to build a good uptrend in the market," he said.

Dubai's five largest active stocks all fell, with DFM Company the worst hit after it dropped 1.71 per cent, while Emaar slumped to Dh10.10, its second-worst finish over the past year. In the capital, the big boys also toiled, most notably in the real estate sector where Aldar Properties and Sorouh fell by 3.77 and 2.96 per cent respectively.