Middle East stocks sag over mediocre economic outlook

DUBAI / Reuters

Middle Eastern stock markets sagged again on Tuesday because of a mediocre economic outlook, with a shock loss at a real estate developer weighing on Dubai and Egypt dropping for a sixth straight day. Union Properties sank 4.3 percent to 0.82 dirham after it reported a 2.29 billion dirham ($624 million) net loss for the second quarter, although the stock came well off its intra-day low of 0.77 dirham. It accounted for over a third of Dubai’s trading volume.
The company said it was taking big provisions to cover past accounting errors related to its booking of a 503 million dirham gain on a plot of land at Dubai’s Motor City.
The errors were discovered as a new board and senior management, appointed in May, conducted an investigation of accounting practices dating back to 2013, the company said. Its chairman later told Al Arabiya television that he did not expect to take further provisions in coming quarters.
Dubai’s stock index dropped 0.2 percent. It was buoyed by a 0.1 percent gain by Emaar Properties, the biggest developer, which reported a 14.4 percent increase in second-quarter profit, in the middle of analysts’ forecasts. But restaurant and retail investment firm Marka sank 5.1 percent to a record low after reporting a second-quarter loss attributable to shareholders of 126 million dirhams ($34.3 million) versus a year-ago loss of 18.7 million dirhams. GFH Financial fell 3.3 percent, bringing its losses over two days to 12.9 percent. The company said it had completed the acquisition of a $1.2 billion infrastructure portfolio in Africa and the Middle East, funded by a $315 million capital increase that took issued and paid-up capital to $975 million – a big dilution for minority shareholders.
Abu Dhabi’s index edged down 0.2 percent although Eshraq Properties, which had been trading at its lowest levels this year, rebounded 1.2 percent in its heaviest volume for five weeks. Saudi Arabia’s index declined 0.3%. Insurer MedGulf, which has been falling sharply this week after reporting a big second-quarter loss, slid a further 2.9 percent. Wafa Insurance, which earlier this month reported lower quarterly profit, fell 3.1 percent.