x Abu Dhabi, UAESaturday 22 July 2017

Dubai takes stock as rumour mill grinds

What's down Bourses. The second wave of selling came in response to a media report that Dubai World is formulating a proposal to offer creditors 60 US cents in the dollar.

DUBAI // Another day, another rumour and a pessimistic research report roil Dubai shares. The markets recovered somewhat, only after the Dubai Government issued a statement rebutting some of the speculation. The Dubai Financial Market General Index ended off 3.5 per cent at 1,617.51 and DP World, which trades on NASDAQ Dubai, closed down 0.23 per cent after dropping as much as 11 per cent earlier, its biggest drop since December 13.

The sell-off came on a day when many analysts were hoping Dubai companies could build on the momentum from positive earnings reports late last week out of Dubai Islamic Bank and Emaar Properties. Instead, "because of the news, we only saw people selling", said Eyad Abdulnabi, the chief operating officer at Al Ramz Securities. The markets first turned south on news that HSBC downgraded DP World from "neutral" to "underweight" and lowered its price target to US$0.38 from $0.50. DP World, the world's fourth-largest ports operator, on January 6 announced it would seek regulatory approvals in the second half of the year for a dual listing on the London Stock Exchange.

In its note to clients, HSBC said that listing was not yet a certainty and that if it did not list it could trigger "sentiment risk". The second wave of selling came in response to a media report that Dubai World, a government-controlled conglomerate that owns a majority stake in DP World, is formulating a proposal to offer creditors 60 US cents in the dollar. The proposal would include a sovereign guarantee, according to Zawya Dow Jones, which cited sources familiar with the matter.

A statement from the Dubai Department of Finance called the report inaccurate, and stocks reacted positively to the rebuttal. Emaar Properties was down 10 per cent at one point in the day, but recovered to finish down 6 per cent. The Abu Dhabi Securities Exchange General Index fell 0.6 per cent to 2,726.48. @Email:skhan@thenational.ae halsayegh@thenational.ae