Tag Archives: emaar crash

ADX and DFM stocks oversold now

The market has already overshot dangerous support levels mentioned in recent blog posts, as evidenced by the performance of select stocks.

It is not advisable to buy anything in such oversold conditions until some confirmation is visible on the charts of a possible extended short term or intermediate trend change.

As stocks languish below short term moving averages on the daily charts, this would be a dangerous market to buy into.

Let’s have a look at what’s going on as of today’s close:

ARMX

holding above 1.49, mentioned recently as a strong FIBO line.

Is this a good omen for Dubai stocks?

ARTC

2.26 did trade first according to the scenario described here recently.

And mentioned here.

Stay away from this stock and avoid buying in a falling market until some sign comes up that the trend may be changing. Expect bounces, but they are to relieve downward legs, that’s all, and suck people in.

EMAAR

Bad scenario. 2.20-32 should decide the fate of the stock this year.

Easy as that.

UPP

Recently, and before the Credit Suisse analysts’ report came out on this company, Union Properties, this blog said that UPP is dead.

Now people are talking about 3 fils a share (that’s 0.03)

Another way of saying “almost dead” (see end of linked post).

ALDAR

Still below 4.56 mentioned earlier on this blog. The more time the stocks spends below there, the more bearish it gets.

UNB is below 3.00 and that signals weakness.

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A look at strength of some UAE stocks

ALDAR

6.53 on 15OCT2009 the highest WEEKLY close,

the highest seen in at least the past 15 months.

The stock closed two weeks above 6.19

a major 2008-9 CRASH FIBO 38.2% WEEKLY CLOSING

Watch 4.56 (also a WC CRASH FIBO) on a weekly closing basis to determine general direction of the stock.

EMAAR

16OCT2009 the stock touched 5.01 intraday

but has not been able to close once above the 2008-9 WC CRASH FIBO 23.6% around 4.97

2008-9 range recap

15.50 06JAN2008 close

1.77 03FEB2009 close

DIC

closed a few times above 1.40, the first WC CRASH FIBO 23.6% but failed to break out above 1.52

ARTC

Failed to reach 4.24, WC CRASH FIBO 38.2%, now struggling again with 2.90-1

UNB

Struggled to stay above 4.06, the WC CRASH FIBO 38.2% for more than a month, must now try so stay above 3.00 site of the lower related FIBO

ETISALAT

Blocked by the 50% WC CRASH FIBO at 12.58 but did well to get there

ARMX
touched 1.94, the WC CRASH FIBO 61.8%

must try to hold 1.49, the 38.2% lower level

AABAR

broke 2.60 WC CRASH FIBO 38.2% and stayed above it for a good quarter last year.

FGB

almost touched 19.88 WC CRASH FIBO 61.8%

in a similar situation as ARMX

NBAD

touched 14.40 WC CRASH FIBO 61.8 on a few weeks, in a similar situation as ARMX and FGB

ADCB

closed just one week above 2.52

a WC MAJOR FIBO of 2007-10 range

STRONG stocks: ARMX , FGB, NBAD

MEDIUM STRENGTH stocks: ETISALAT

WEAK stocks:  AABAR, ALDAR, ARTC, UNB,

VERY WEAK stocks: ADCB, DIC, EMAAR

Special Mention

UPP, almost dead


GCC boom is over

The end of 2008 is nigh, and the year has answered a very important question:

Would the energy-rich countries of the Gulf Cooperation Council weather or even survive a global economic downturn? 

In other words, did the region’s economy have anything special going for it that allowed for a unique decoupling  from the rest of the world?

The short and blunt answer is No.

Crude oil prices below USD 50 a barrel have put paid to any notion of continued boom in general in the Gulf, but regional stock markets priced in a recession ahead of the total collapse in the price of oil.

The global banking crisis claimed a big victim in Dubai, even as the price of crude oil remained above USD 100 per barrel at the time. The month of July saw the UAE stock markets enter a bear market as the general index’s gave up over 20% of gains achieved since September 2007. EMAAR‘s stock price broke below crucial support at AED 9.00 in the summer, foreshadowing a total collapse of the real estate (property) market a few months later. The spectacular collapse would begin in earnest a few weeks after the collapse of Lehman Brothers in September, when the interbank credit markets froze.

Looking back, in the summer the UAE stock markets began their precipitous fall as shareholders grew increasingly nervous over Dubai’s massive reliance and dependence on money borrowed from the international credit markets. Dubai used banking leverage to bankroll all kinds of real estate developments, infrastructure projects, and even the purchase of international assets such as ports and stock exchanges.

Land prices were on the verge of crashing in the summer, to be followed by the rest of the property market after the significant Cityscape show in early October.

The UAE stock market crash that began in July continued to accelerate as the Lehman collapse confirmed to everyone the interbank credit market was as good as dead, and that Dubai would be left scrambling for “liquidity” or cash flow to refinance all its debts.

Optimists revelled in the still relatively high price of crude oil at the time, believing prices over USD 60 a barrel would shield the UAE and the GCC from a disastrous economic recession, and help bankroll further economic development. 

Now 25 dollar oil is just a few percent away, leaving governments here to ponder their economic future, as their sovereign wealth funds absorb massive losses and the prices of their international assets keep falling.

The picture has become ugly for Dubai in particular, with people losing jobs and a property market that has lost far more value (over 50%) in a much shorter timeframe than most markets (less than a couple of months).

Banking shares have now caught up with the stock market leaders in crashing in value, as shareholders realize job cuts mean higher default rates on mortgage and credit card and other personal debt. 

The situation is dire in the main GCC countries (Kuwait, Saudi, and the UAE) but it is more acute in Dubai.