Heightened uncertainty brought on by the news that both Arabtec and Aldar Properties are looking to shareholders to help solve their funding needs spooked investors last week. This is a reminder to investors that financing remains an issue for many UAE companies given high debt levels, impact of the economic downturn, and growing oversupply in real estate. All will continue to weigh on the economy and stock market for the foreseeable future. Once again, investors are wondering, what's next?
The reaction was noticeably more bearish in Dubai than Abu Dhabi. This makes sense given the relative strength of the Abu Dhabi Securities Exchange General Index (ADI) compared to the Dubai Financial Market General Index (DFMG), which can be seen on the charts and is discussed below.
Investors will be watching closely to see how shareholders are handled in Arabtec and Aldar in regards to fairness, transparency and disclosure. This will impact the perception of current and future risk in UAE markets for investors. Regardless of this news, on a technical basis, both UAE stock markets continue to evolve normally, with the possibility of a recovery from the recent downtrend still in place, at least so far.
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