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U.A.E. Shares Retreat on Aldar Delisting Concern, Margin Calls

Dec. 21 (Bloomberg) -- Abu Dhabi’s benchmark stock index dropped to the lowest in more than two years amid speculation Aldar Properties PJSC may be delisted even after the company said there was no such plan and as banks made margin calls.

Aldar, Abu Dhabi’s biggest developer by market value, and Sorouh Real Estate Co. retreated to the lowest levels since their shares were listed. Aldar has tumbled 11 percent this week. The ADX General Index dropped 1.3 percent to 2,343.25, the lowest since March 2009, at the 2 p.m. close in Abu Dhabi. Dubai’s DFM General Index fell 1.8 percent to 1,335.87, the lowest since June 2004.

“Banks are deleveraging and there was some worry over Aldar shares being privatized, thus hurting minority investors,” said Nabil Farhat, a partner at Abu Dhabi-based Al Fajer Securities.

Aldar won’t delist its shares from the stock market, Deputy Chief Executive Officer Mohammed Khalifa Al Mubarak said today, before the close of the U.A.E. markets. The stock trimmed losses of as much as 7.1 percent before closing 3.5 percent lower at 82 fils, the lowest since April 2005.

The company last week converted 2.1 billion dirhams ($572 million) of bonds held by Mubadala Development Co., its largest shareholder, into shares valued at 1.75 dirhams each, the bottom end of an agreed range.

Margin Calls

Abu Dhabi’s ADX Real Estate Index fell 2.5 percent today, the worst performer among the nine sectors tracked by the gauge. The benchmark measure dropped 2.9 percent this week.

Sorouh retreated 2.5 percent to 79 fils, the lowest since December 2005.

Dubai’s benchmark stock index is down 18 percent in 2011 and Abu Dhabi’s shares have retreated 14 percent. That compares with a 10 percent decline in the Bloomberg GCC 200 Index.

“The sell-off is being driven by banks that are making margin calls by the year-end,” said Mohammed Ali Yasin, chief investment officer at Capm Investment PJSC in Abu Dhabi. “Banks used stock portfolios as collateral, and now that the collateral has dropped in value, they have taken the decision to sell so they won’t have to take provisions.”

A margin call is a broker’s demand that a customer provide additional cash or securities to satisfy requirements for the purchase or short sale of assets, or to cover an adverse price movement.

Oman’s MSM 30 Index was little changed, while Kuwait’s gauge declined 0.2 percent. Bahrain’s BB All Share Index slipped 0.1 percent. Saudi Arabia’s Tadawul All Share Index rose for a sixth day, advancing 0.7 percent, its longest stretch of gains since April 27. Qatar’s QE Index and the Bloomberg GCC 200 Index climbed less than 0.1 percent.

To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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