Dubai's main stock index sank 4.0 per cent yesterday, one day after the Central Bank of the UAE warned that the country's property market could be close to "overheating".
The drop was the market's steepest in three weeks. With its latest close at 4,771.10 points, the Dubai Financial Market General Index is down 11.2 per cent from its recent peak of 5,374.11 on May 6.
The day's biggest decliner was Arabtec. Its shares dropped 9.6 per cent to Dh5.42 each, their lowest closing price since April 20.
Observers believe the recent sell-off might have gone too far.
“Some people are saying: ‘Yes, this is correct, the property sector is going too high and we are repeating the 2008 bubble’. That’s why some people are afraid to carry those shares and they start selling like crazy,” said Khaldoun Jaradat, the trading manager at Abu Dhabi-based Brokerage House Securities.
“But if our economy is not bad and the world [economy] shows no bad signals, for the property market to go down 3 or 5 per cent in a day, or 6 to 10 per cent in two days – we didn’t even do that years back.”
Saleem Khokhar, the head of equities at National Bank of Abu Dhabi’s asset management group, said the recent declines are a buying opportunity for investors.
He also said that steps taken to curb property speculation are already paying off.
“We’re already seeing the effects of the Central Bank’s regulations on that sector. I’m less concerned about that side of the situation. I think what concerns me the most is how well the economy is performing in the UAE; and to me I’m not seeing any chinks in the armour there.”
Mr Khokhar said the view over the next 12 to 18 months was positive. “In the next two weeks or so, I’ve been saying for a while that volatility is going to be there. That’s going to give you an excellent entry point into some of the listed equities that are out there, to get them at better valuations.”
He said volatility is common in the Dubai market and he expected the current bout to last through Ramadan. “We will get through the volatility and then we will be back up beyond where we were at the highs, because the underlying economy’s fundamentals are really strong,” he said.
He said a drop of up to 15 per cent in the index would not be unusual, especially “given the extent of the gains that we’ve seen last year and the year to date”.
The DFM has a year-to-date gain of 41.5 per cent. In 2013 it rose 107.6 per cent.
The Abu Dhabi Securities Exchange General Index did not suffer as heavy a blow yesterday, falling 1 per cent to 4,948.10. Its year-to-date gain stands at 15.3 per cent.
In Dubai, Union Properties shares decreased by 4.7 per cent to Dh2.19 each, again with a high volume of 71.7 million. Emaar shares fell by a more modest 3.7 per cent to Dh9.58 each.
While the capital was cushioned from the shock waves, Aldar stock dipped by 4.2 per cent, taking its share price to Dh4.02 each. RAK Properties shares lost 6.1 per cent to close at Dh1.07 each.
Mr Jaradat said the drops fuelled by the Central Bank announcement showed that many investors did not understand the companies they bought stock in.
He said those who sold en masse based on speculation, rather than on fundamentals, did not have faith in the stocks themselves.
“They buy to make some money. They don’t know what’s beyond that share, they don’t know what that company is. They buy that share and that is the ultimate. So when they start seeing that the shares are going down, they sell them,” he said.
Mr Jaradat said Arabtec’s share price fall of almost 10 per cent yesterday, on top of yesterday’s almost 7 per cent, was “too much” for the slightly volatile market. He attributed the quick loss to the company’s rapid rise, as opposed to the more conservative price movements shown by other companies, such as Emaar.
“When you see you are about to lose your profit, of course you will sell and khalas [it’s finished], that’s it … Most people are making money off Arabtec, though, they aren’t selling.”
halbustani@thenational.ae
Follow us on Twitter @Ind_Insights
BIGGEST CYBER SECURITY INCIDENTS IN RECENT TIMES
SolarWinds supply chain attack: Came to light in December 2020 but had taken root for several months, compromising major tech companies, governments and its entities
Microsoft Exchange server exploitation: March 2021; attackers used a vulnerability to steal emails
Kaseya attack: July 2021; ransomware hit perpetrated REvil, resulting in severe downtime for more than 1,000 companies
Log4j breach: December 2021; attackers exploited the Java-written code to inflitrate businesses and governments
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Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
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The specs
Engine: 2.0-litre 4cyl turbo
Power: 261hp at 5,500rpm
Torque: 405Nm at 1,750-3,500rpm
Transmission: 9-speed auto
Fuel consumption: 6.9L/100km
On sale: Now
Price: From Dh117,059
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UAE currency: the story behind the money in your pockets
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TRAP
Starring: Josh Hartnett, Saleka Shyamalan, Ariel Donaghue
Director: M Night Shyamalan
Rating: 3/5
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Tips for job-seekers
- Do not submit your application through the Easy Apply button on LinkedIn. Employers receive between 600 and 800 replies for each job advert on the platform. If you are the right fit for a job, connect to a relevant person in the company on LinkedIn and send them a direct message.
- Make sure you are an exact fit for the job advertised. If you are an HR manager with five years’ experience in retail and the job requires a similar candidate with five years’ experience in consumer, you should apply. But if you have no experience in HR, do not apply for the job.
David Mackenzie, founder of recruitment agency Mackenzie Jones Middle East
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EXPATS
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Playing records of the top 10 in 2017
How many games the top 10 have undertaken in the 2017 ATP season
1. Rafael Nadal 58 (49-9)
2. Andy Murray 35 (25-10)
3. Roger Federer 38 (35-3)
4. Stan Wawrinka 37 (26-11)
5. Novak Djokovic 40 (32-8)
6. Alexander Zverev 60 (46-14)
7. Marin Cilic 43 (29-14)
8. Dominic Thiem 60 (41-19)
9. Grigor Dimitrov 48 (34-14)
10. Kei Nishikori 43 (30-13)
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
The biog
Age: 59
From: Giza Governorate, Egypt
Family: A daughter, two sons and wife
Favourite tree: Ghaf
Runner up favourite tree: Frankincense
Favourite place on Sir Bani Yas Island: “I love all of Sir Bani Yas. Every spot of Sir Bani Yas, I love it.”
War 2
Director: Ayan Mukerji
Stars: Hrithik Roshan, NTR, Kiara Advani, Ashutosh Rana
Rating: 2/5
Know before you go
- Jebel Akhdar is a two-hour drive from Muscat airport or a six-hour drive from Dubai. It’s impossible to visit by car unless you have a 4x4. Phone ahead to the hotel to arrange a transfer.
- If you’re driving, make sure your insurance covers Oman.
- By air: Budget airlines Air Arabia, Flydubai and SalamAir offer direct routes to Muscat from the UAE.
- Tourists from the Emirates (UAE nationals not included) must apply for an Omani visa online before arrival at evisa.rop.gov.om. The process typically takes several days.
- Flash floods are probable due to the terrain and a lack of drainage. Always check the weather before venturing into any canyons or other remote areas and identify a plan of escape that includes high ground, shelter and parking where your car won’t be overtaken by sudden downpours.
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