Dubai - Emaar Properties led the decline in Dubai stocks three days after a fire ripped through one of its hotels on New Year’s Eve. Abu Dhabi shares also fell.
Emaar, which is about 30% owned by the Dubai government, dropped as much as 4.4%, before paring its slide to 1.6% at the close, the biggest contributor to the DFM General Index’s 0.5% loss. The fire is covered by insurance and Emaar sees “no material impact" because of the blaze, according to a company statement to the stock exchange on Sunday. Abu Dhabi’s ADX General Index retreated 0.8%.
“Emaar’s statement helped halt some of the panic selling we saw at the beginning of the session, but investors still have questions,” said Dubai-based Samer Al-Jaouni, the head of institutional business at Menacorp, one of the biggest brokerages in the United Arab Emirates. “The company needs to clarify the amount and percentage of cash flow that this hotel was contributing to Emaar’s hotel portfolio.”
Real Estate Index highly correlated to main Dubai gauge
The Address Downtown Dubai hotel, which Emaar developed, owned and operated, caught fire on Thursday as the city prepared for its annual year-end fireworks display.
The blaze capped a challenging year for the emirate’s real estate industry, which is struggling with falling property prices amid a slump in oil, just as the dirham’s peg to the dollar makes purchases more expensive for overseas buyers.
Dubai’s real estate and business services accounted for 14% of the emirate’s gross domestic product in the first quarter of 2015, according to the latest government data.
Real Estate Index
The DFM Real Estate Index retreated as much as 2.8%, the most in two weeks, before trading 0.6% lower. The gauge sank 25% last year, the most since 2008. Emaar Malls Group, which is about 85% owned by Emaar Properties, fell 0.4% on Sunday.
Fifteen people sustained light to moderate injuries at the hotel, while one person suffered a heart attack, the Dubai media office said on Thursday. The blaze comes almost a year after a fire at the Dubai Marina Torch, one of the world’s tallest residential buildings. In 2012, the Tamweel tower in the Jumeirah Lake Towers district neighbouring the marina was wrecked by fire.
"The longer term issue would be to look at safety of skyscrapers in general," said Abu Dhabi-based Sachin Mohindra, a money manager at Invest AD Asset Management. “This is an industry wide issue and has been discussed since the fire at the Tamweel Tower in JLT."
Saudi stocks rise
Saudi Arabia’s Tadawul All Share Index rose 0.7% at 13:17 in Riyadh, led by Al Rajhi Bank’s 2.7% gain. The Saudi Stock Exchange - Tadawul, the Arab world’s largest bourse, on Thursday disclosed plans to sell shares in an initial public offering in 2018.
Etihad Etisalat was little changed.
The Saudi stocks regulator referred unnamed executives from the telecommunications company known as Mobily to prosecutors for allegedly providing incorrect or deceptive statements about financial assets, according to a statement to the bourse on Thursday.
Qatar’s QE Index lost 1.1%, while Oman’s MSM30 Index added 0.1%. Jordan’s ASE General Index slid 1.1%, most since November 15. First Gulf Bank led Abu Dhabi index’s retreat with 1.2% drop.
Israel’s benchmark TA-25 Index advanced 0.1% led by Teva Pharmaceutical Industries’ 0.9% gain. Teva said it expects to get $658m in proceeds from the purchase of underwriter options.
Elbit Systems rose 1.7%. Local website Calcalist reported that two competitors have walked away from a tender for Israel Military Industries, increasing Elbit’s chances of winning, Ilanit Sherf, the head of research at Psagot Investment House, said by phone.