x Abu Dhabi, UAEWednesday 24 January 2018

Shuaa shares fall after Moody's downgrades investment bank

Markets Update: Moody's Investors Service downgraded its rating on Shuaa Capital citing the likelihood that the Dubai-based investment bank's results will remain negative, or at best weak.

Moody’s Investors Service downgraded its rating on Shuaa Capital citing the likelihood that the Dubai-based investment bank’s results will remain negative, or at best weak, given the ‘uncertainties’ around executing a new business strategy in a difficult environment.

Analysts Nitish Bhojnagarwala and Yves J Lemay lowered their rating to B1, down from Ba3 and assigned a negative outlook on the company.

“Shuaa faces many challenges in building a sizable franchise given strong competition in the sector and the tough regional and global investment environment,” the analysts at Moody’s said in a statement.

Shares of Shuaa fell 4.5 per cent at the bell on Wednesday to trade at 75 fils a share on the Dubai Financial Market.

Shuaa, established in 1979, is among the oldest investment banks in the region.

The company has not booked a profit in four consecutive years. The shares have lost 72.6 per cent of their value in the same period.

Net loss last year stood at Dh294 million as shareholder’s equity continues to be wiped.

“These ongoing losses can be primarily attributed to reduced revenues from all business lines, multiple write downs of their investment book, coupled with a very high cost base, although this is being addressed with an ongoing downsizing program, that should reduce operating costs once completed.”

Shuaa shut its brokerage operations last year as trading volumes collapsed after Europe’s debt crisis worsened and popular uprisings toppled leaders in Egypt, Libya, Tunisia and Yemen.

Arabtec Holding lost 0.5 per cent to Dh3.59. Tamweel declined 0.7 per cent to Dh1.27. Emaar Properties lost 0.6 per cent to Dh3.28. The Dubai Financial Market General Index lost 0.4 per cent to 1661.91 points. The Abu Dhabi Securities Exchange General Index was up 0.3 per cent to 2513.83 points.

Elsewhere in the region, Kuwait’s measure was little changed at 6323.20 points. Bahrain’s index was also little changed at 1149.18 points. Oman’s MSM 30 Index slipped 0.3 per cent to 5934.19 points. Qatar’s QE Index was little changed at 8670.34 points.

The Saudi Tadawul All-Share Index fell 0.1 per cent to 7512.26 points yesterday

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