Developer shares slip on Greek fall out

Aldar leads fall as materials get slight reprieve from US Fed news

Aldar Properties PJSC led sector falls following a downgrade
Aldar Properties PJSC led sector falls following a downgrade

Developer stocks and commodities showed they were not immune to the financial fall-out in Greece as Emaar Properties PJSC and Drake & Scull International were among those that dragged the DFM index down 1.9% yesterday.

But there was a slight reprieve for some metal prices following the pledge by the US Federal Reserve to maintain low interest rates.

Emaar, riding high in recent weeks following a successful US $1.32 billion debt rollover and strong quarterly results, fell 2.2% to AED3.79, its lowest level for a month. The hit puts a slight damper on the company’s annual general meeting, to be held later today.

Arabtec saw similar pain, losing 3.72% of its share price to close at AED2.33. Drake & Scull International lost 3.72% to reach AED0.89, while Abu Dhabi-based Aldar Properties PJSC and Sorouh Real Estate PJSC slipped more than 5 % following a downgrading by HSBC Holdings. In all, the index fell to 1,174.09, a six-week low.

In Riyadh, KSA, the Tadawul All Share index fell 45 points from 6,912 to 6,867 to conclude a volatile seven days that began last Wednesday at 6,730 and peaked at 6,929. Building and construction, real estate and cement all fell as indices.

Nickel and aluminium had tumbled on Monday as the fall-out from the crisis in Greece fed through to the commodities markets.

Copper per ton was slightly higher yesterday at $7,465 in Singapore, a 0.9% rise, with copper futures up to $339.1 per pound.

On the London Metal Exchange, nickel was knocked off its recent price surge on Monday by falling more than 4.5% to US $24,750.

Aluminum in London rose 1.4% to $2,220 a ton, a rise of 1.4%, according to Bloomberg data.

Yesterday construction steel product prices dropped by 20 yuan ($2.93) to 40 yuan per ton on Wednesday in Shanghai, according to Mysteel.com.

The bearish results reflect an increasing risk aversion among traders after it was revealed on Monday that Greece might require more than the EU45 billion that has been earmarked for its stricken economy - a combined bail-out from the European Union and the International Monetary Fund. It is believed the revised amount will be closer to EU70 billion, according to senior figures in both institutions speaking to the international press.

It was also revealed yesterday that the world’s biggest iron ore miners had threatened to cut off supplies to steelmakers unless they complied with price hikes of up twice current prices.

The China Iron Steel Association said that Vale SA, Rio Tinto and BHP Billiton – the world’s three biggest miners – had demanded price increases of between 90% and 100%, according to Luo Bingsheng, its deputy chairman of the association, speaking in Beijing.

Luo questioned the validity of the negotiations from the iron ore oligarchs that essentially amounted to blackmail. The World Steel Association has asked for a full enquiry.

It is the latest chapter in the upheavals in the steel market caused by the biggest iron ore suppliers demanding a change to the system of selling based on annually agreed prices to a more frequent method.

The move will see the companies capitalize on the rising demand and price for steel, which will increase in demand by 10.7% this year, according to the World Steel Association.

Rubber fell to prices last seen a month ago low, with futures in Tokyo declining by 1.9% to Y305.8 a kilogram ($3,278 a metric ton), the lowest closing price for a month, extending a decline from a 21-month high of 338.5 yen reached on 16th April, reversing strong gains this year.

The Association of Natural Rubber Producing Countries – which includes market leaders such as Thailand and Indonesia - said rubber market will be supported by a faster-than- expected global economic recovery and by accelerating growth in demand.
 

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