Aldar set for spotlight this week

Aldar Properties will be on the radar of local investors this week as news on whether the Abu Dhabi developer will secure government funding is likely to dictate the movement of the market.

The capital's largest builder has more than Dh10 billion of debt due to be repaid next year and its property sales have dwindled in the aftermath of the global financial crisis.

Company officials said last month a "framework" for government aid would be announced by the end of the fourth quarter. An Aldar spokesman said late last week an announcement date had not yet been set.

If financial aid comes in the form of a loan rather than an equity investment, the holdings of current shareholders will not be diluted and most investors and analysts would be likely to see the move as market-friendly.

Shares in the stock soared more than 9 per cent during intraday trading last week on the speculation.

The stock rose 9.17 per cent to close at Dh2.50, with most of the gains made at the end of the week as eager investors piled into the stock.

But some analysts have said there is still a chance the company will announce a rights issue to raise funds, which would dilute shareholdings and reduce the value of shares.

Mohammed Ali Yasin, the chief investment officer at CAPM Investment, said investors could start selling shares to lock in recent gains if there was not an announcement soon.

Today will also be the first day of trading since Tabreed reduced its share capital to increase the share price.

After the company exchanged one new share for every five existing shares, the stock should begin the day trading at Dh2.10, up from Dh0.42 on Thursday. The company said the move would be "value-neutral" for most shareholders because they would still own the same percentage of the publicly traded shares.

Positive sentiment on the back of Qatar's 2022 World Cup selection should also feed into the week's performance.

Property stocks experienced some of their biggest gains in months when developers revealed ambitions to secure infrastructure contracts ahead of the event, despite the fact it is more than a decade away.

The Qatar exchange jumped to a two-year high earlier in the week and maintained an upward trend throughout the week.

"The impact of Qatar will continue to ride out on local markets. It hasn't been played out yet," said a head of MENA equities of an international bank in Dubai who did not want to be named.

But investors will also be looking to end on a positive note, as the end of the year approaches.

"I believe the end of the year, we have a good opportunity to gain points in both indices," said Samer al Jaouni, the general manager of the Middle East Financial Brokerage Company. "I think the market will gain more than 2 to 3 per cent on a technical basis and we'll all hope that the DFM [Dubai Financial Market] closes the year-to-date in the positive," Mr al Jaouni said, adding that the unique situation of Dubai's debt situation had left it lagging other GCC markets.

The Dubai Financial Market General Index, the Emirate's main bourse, has fallen about 7 per cent so far this year, a poor result compared with Qatar, the region's best performing exchange, which has gained about 18 per cent.

Last week the Dubai index dropped 0.78 per cent to 1,692.83 points, while the Abu Dhabi Securities Exchange gained 0.44 per cent to 2,761.6 points.

"In general, we are at the end of the year and fund managers are not going to take risks because they will already have closed the positions they will end at," Mr Yasin said.

The subdued investor interest has led to a lack of liquidity and desperately thin volumes on local markets, one of the reasons the mobile telephone retailer Axiom cited when it scrapped its initial public offering last week.

An absence of a positive catalyst to revive investor confidence has reflected much of the muted activity in the UAE. Only major news, such as a decision by Dubai Holding on its loan restructuring, could move markets significantly this week, analysts said.

"Our problem is the banking sector, its macros issues, which will not change in the next two weeks," Mr al Jaouni said.

"Practical steps will move the markets."

fhalime@thenational.ae