By Hayat Hussein
“Emaar Properties” led the decline in Dubai stocks after a fire ripped “Adress” hotel
Arab stocks absorbed the chock of Saudi budget and its performance was positive in general last days.
The number of sessions was few as most Arab bourses closed on celebrating New Year like the global.
The Kingdom announced on 28 of December its 2016 budget with deficit 15% and it started energy subsidy cuts. The Saudi index declined on the first session after the announcement but it recovered on the second day.
Cost of subsidy cuts
Saudi Arabia’s Tadawul rose by 0.59%on Sunday – the first session in 2016 – to close at 6,952 points.
113 stocks were in green, 48 others were in red, while 22 remained unchanged.
Many listed companies revealed the raise of its operation cost after Saudi Arabia hiked the fuel prices like Maaden company which said in a statement on Sunday that it is SAR 120 million.
Many analysts expect that the most negative effects will be on Petrochemical industry. Fahad Al-kasem, the manger of Amwal company for financial consults in Rayed said to CNBC Arabia TV, “inflation will reach to 10% from 5% in the Kingdom”.
Kuwaiti index
Kuwaiti INDEX (MARKET-IXP) rose0.05% to 5615.12 points on Thursday. Kuwait said on Tuesday that it putSubsidy rationalization policy to secure Kuwaitis’ needs.
“The Kuwaiti citizens will not be affected by the procedures which the finance ministry will undertake to cover budget deficit” the ministry announced on Tuesday.
Kuwait is estimating KWD 8 billion budget deficit in 2015, based on a previous expected oil price at $45 per barrel; oil prices reached $28 a barrel on Tuesday.
The country intends to raise fuel prices as of 2016.
According to Kuna, Undersecretary of Kuwait’s Finance Ministry Khalifa Hamada said on Wednesday, the government plan to rationalize subsidization will contribute to saving KD 2.6 billion in three years, which shows the importance of the plan in a time when the budget is witnessing a large deficit because of falling oil prices. He pointed out that the rationalization process will ensure the sustainability of development in Kuwait and give the State the ability to continue to provide essential services to its citizens, such as education, health, security, justice and other services that are indispensable.
Kuwait’s new law for direct investment is expected has main role to support the economy. It eased the investment processors which caused direct investment fleeing. Many international companies like American General Electric and Chinese Hawaii announced starting of investment in Kuwait.
UAE index
Emaar Properties PJSC led the decline in Dubai stocks three days after a fire ripped through one of its hotels on New Year’s Eve. The DFMGI fell 0.5% to reach 3,134.98 points. Also, Abu Dhabi Securities Exchange (ADX) closed in the red , weighed by the collective decline of leading stocks. The general index lost 0.83% to reach 4,271.5 points.
Emaar, which is about 30 percent owned by the Dubai government, dropped as much as 4.4 percent, before paring its slide to 1.6%. The fire is covered by insurance and Emaar sees “no material impact” because of the blaze, the company said on Sunday. The developer appointed Dutco Group to restore the hotel.
“Emaar’s statement helped halt some of the panic selling we saw at the beginning of the session, but investors still have questions,” said Dubai-based Samer Al-Jaouni, the head of institutional business at Menacorp, one of the biggest brokerages in the United Arab Emirates to Bloomberg. “The company needs to clarify the amount and percentage of cash flow that this hotel was contributing to Emaar’s hotel portfolio.”
The Address Downtown Dubai hotel, which Emaar developed, owned and operated, caught fire Thursday as the city prepared for its annual year-end fireworks display.
Real Estate Index
Mahmoud Ibrahim, a senior equity analyst at Mubasher International, wrote in a note to clients on Saturday. The fire could cost Emaar Hospitality about 370 million dirhams ($101 million) in lost revenue this year, he said.
Fifteen people sustained light to moderate injuries at the hotel, while one person suffered a heart attack, the Dubai media office said on Thursday. The blaze comes almost a year after a fire at the Dubai Marina Torch, one of the world’s tallest residential buildings. In 2012, the Tamweel tower in the Jumeirah Lake Towers district neighboring the marina was wrecked by fire.
“The longer term issue would be to look at safety of skyscrapers in general,” said Abu Dhabi-based Sachin Mohindra, a money manager at Invest AD Asset Management. “This is an industry wide issue and has been discussed since the fire at the Tamweel Tower in JLT.”, according to Bloomberg.
The DFM Real Estate Index retreated as much as 2.8 percent, the most in two weeks, before trading 0.6 percent lower. The gauge sank 25 percent last year, the most since 2008.
Red and Green
Amman index (ASE) declined 0.88% to 2117.7 points and QUDS index 1% to 527.38 points on Sunday. Casablanca index (MASI) rose 0.64% to 8925.71 points and Tunisian index (TUNINDEX) 1.05% to 5042.16 point on Thursday.
