08/05/2017 05:32 AST
Sentiment turned sour across Dubai stocks after oil breached the key level of $50 (Dh183.50) per barrel, and selling in shares of Drake and Scull and Arabtec, trigerring the Dubai index to fall below the keenly watched 3,400 level.
Reversing gains made in late session on Thursday, the Dubai Financial Market General Index closed 1.04 per cent lower at 3,384.05, breaching the key support level of 3,400 level, which it failed to breach for the past five sessions.
The recent drop in oil prices, absence of catalysts and weak liquidity, regional markets were sold off across the board. Breaking below the $50/barrel affected investor sentiment which was reflected in today’s session, Tareq Qaqish, managing director, Asset Management at Menacorp said.
“In the UAE the news of restructuring of DSI and Arabtec was not welcomed by investors and pushed their prices limit down. Although for existing investors bringing fresh capital to both companies were positive to continue the business, however the dilution effect and possible right issue were the main concerns,” Qaqish said.
Cash flow challenges
Arabtec, which was the actively traded stock, fell more than 9 per cent to end at Dh0.755. Drake and Scull closed 9.93 per cent to end at Dh0.399. Both the stocks contributed to 37 per cent of the total traded value of Dh236 million.
“We expect to see buyers in the coming few days as both companies have accomplished to resolve part of their cash flow challenges and possibly start winning new projects,” Qaqish said.
Among other stocks, Gulf Finance House closed more than 3 per cent lower at Dh2.24. Union Properties fell 2 per cent to close at Dh0.970. Emaar Properties gained along with shares of other five firms. Emaar Properties, which has the highest weigtage on the index, closed 0.27 per cent higher at Dh7.30.
Shares of 27 firms fell out of a total of 37 stocks.
Abu Dhabi
The Abu Dhabi Securities Exchange General index closed 1.02 per cent lower at 4,570.24. Dana Gas closed 4.55 per cent lower at Dh0.42. Abu Dhabi National Energy closed 3.39 per cent lower at Dh0.57. Eshraq Properties closed 2.68 per cent lower at Dh1.09.
Going ahead, oil will continue to be the main driver of sentiment.
“For the coming period, oil will remain the main driver for regional market performance, reflected by increasing investment cautiousness and thin trading volumes,” Al Masah Capital said in a note.
Elsewhere in the Gulf, Kuwait Stock Exchange index fell 2.9 per cent, leading the regional losses.
Saudi Arabia’s Tadawul index closed 0.97 per cent lower at 6,857.15. All regional markets were down, reflecting the weakness in oil prices,” Menacorp’s Qaqish said.
The Qatar exchange index closed 1.05 per cent lower at 9,833.58. The Bahrain bourse index closed 0.48 per cent lower at 1,324.85.
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