Aldar on the Edge (Not Any More)

At the beginning of the week I noted how the stock price of Aldar Properties was teetering on the edge, at the 2 dihram level.

Well, it's not any more. The 2 dihram level offered no support and stock fell to a new lifetime low of 1.81 by Thursday's close.  Aldar finished down 11% for the week and is now down 20% since the start of the year (and an eye watering 86% from its 2008 all time high).

Enjoy.

Aldar on the Edge

How the mighty have fallen.  Aldar Properties joins a steadily increasing list of UAE companies that have required financial assistance. 

But Aldar is significant in that it is the first big Abu Dhabi company to get itself into trouble (from my knowledge, anyway).  We're used to this kind of thing with Dubai companies but Aldar's situation shows that problems exist further afield.

One analyst report I read claimed that Aldar wasn't the subject of a bailout but was just raising funds, like any other company might do.  So, Aldar's a bit like Facebook then.  Just raising a bit of capital

Well, bailout or not, Aldar's stock price is teetering on the edge.  As the chart below shows the current stock price is sitting at the 2 dihrams level.

The two previous times Aldar's share price has visited this level (late 2008 and mid 2010) the stock has rallied. And what about this time? Under the circumstances you would think it's probably going to be a case of third time unlucky. 

What Aldar does could be important to the wider Dubai and Abu Dhabi markets. Aldar is a heavily traded stock and if breaks below the 2 dihram level that could impact sentiment for other stocks.

Time to keep an eye on Aldar, even if don't own it right now.

Enjoy.

Is Improving Market Breadth Signalling New Year Advances for Dubai and Abu Dhabi Stocks?

The August to October stock rally in the UAE saw the DFM General Index rise +22% and the ADX Index rise by +15%.

Since the end of October, however, both markets have given back some of those gains with the Dubai market 10% off its highs and the Abu Dhabi market off 5%.

The question now is does this current decline represent a mere pull-back before the market continues to move upwards or is it the beginning of a larger downwards move, the kind of which traders and investors in the UAE markets have become so used too over the past several years?

Well, trying to pick significant stock market bottoms can be a perilous endeavour.  Especially for the UAE or other GCC markets whose price action is highly persistent (when prices start moving in a certain direction, up or down, they have a strong tendency to continue moving in that direction).

That said, it's a good idea to at least be on the lookout for potential market turning points.  In this week's market analysis the trend outlook for the UAE markets is still mildly bearish.  However, the breadth measures for the Dubai and Abu Dhabi markets (as measured by the 20-day advance/decline indicator) have both turned positive this week: 

Now, any sizable market decline next week will see market breadth turn negative again.  But if UAE stocks manage to hold up this coming week and breadth remains positive it could signify a larger upwards move is in the offing.

For a refresher on market breadth and how UAE stocks have performed under positive and negative breadth please see these previous posts:  Market Breadth I, Market Breadth II & Market Breadth III.

Enjoy.