Pearls of wisdom? Couldn’t believe my eyes when I read the following in Gulf News:
“Now is the time to unite and collaborate… [so that] new supply is properly managed and demand is adequately met,” said Mohammad Alabbar at the Dubai International Finance Centre conference. “Today, the real estate sector is witnessing a healthy correction,” a result of the ongoing global financial crisis.
Alabbar is the chairman of Emaar Properties. Maybe his speech sent the wrong signal to the investors – the market knocked off close to the stipulated 10% – Emaar closed the day at AED2.46 a share!
From a 52-week high of 15.85 to 2.46 is some correction. Emaar has lost almost 85% market value in the last year, and if the Chairman thinks its is a “healthy correction” – investors need to be more careful.
I am not a stock analyst. If my company lost 85% market value, I wouldn’t call it a healthy correction. Based on that statement, if investors were to trust me – what can I say?
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Here is some more bad news:
ETA on S&P negative watch over debt fears
Ratings agency Standard & Poor’s has put Dubai-based ETA Group on negative watch with a view to downgrading its credit rating due to concerns over the construction and property-dominated firm’s increased leverage.Standard & Poor’s placed the firm, whose property division has a $10 billion portfolio, on CreditWatch with negative implications with long-term BBB- corporate credit rating, the ratings agency said in a statement.
It also put a ‘BBB-’ debt rating on a $300 million senior unsecured bank loan due 2012 issued by subsidiaries Emirates Trading Agency, ETA Star Holdings, and Associated Construction and Investments Company.
The potential downgrade to junk rating is the latest indication Dubai-based companies are feeling the squeeze from tighter lending conditions, a fall in property prices and a collapse in investor confidence as the global credit crunch begins to sweep across the Gulf Arab region’s trading hub.
“These actions are due to concerns over increasing financial leverage, the likely adverse effect of the continuing global economic slowdown on ETA’s cyclical activities, and low levels of headroom under financial covenants,” said Standard & Poor’s credit analyst Stuart Clements.
ETA’s construction unit is the sixth largest UAE contractor, according to a survey by London-based Meed.
