Disenchanted investors pushed Shuaa Capital shares to a new 52-week low yesterday. Shuaa on Tuesday released its earnings report after the market closed, posting a second-quarter net loss of Dh56.6 million from a Dh91.7m profit in the same period last year. Investors were not thrilled with the numbers. Shuaa shares declined 4.5 per cent to 94 fils yesterday, falling further below the 12-month low of 99 fils touched earlier this week. They have dropped more than 56 per cent since peaking in October last year.
Dwindling trade volumes on the regional bourses are contributing to Shuaa's losses. "Regional markets have experienced the lowest levels of trading activity since 2004 during the first half of the year and investor confidence has continued to weaken significantly," said Majid al Ghurair, the chairman of Shuaa, who does not believe the current market conditions "can persist indefinitely". The UAE markets are among the worst hit in terms of decline in trading activity. On the Abu Dhabi Securities Exchange, the average daily trading volume this year has been about 66 million shares compared with 149 million last year, while on the Dubai Financial Market average daily volume has dropped close to 170 million from 445 million.
At the end of first half, Shuaa liabilities stood at Dh700m, down from Dh1.4bn last year, and it has narrowed its net loss for the same period to Dh37m from Dh106.2m. But its financial woes are not over. The asset management and investment banking operations continue to struggle in adverse market conditions as the bank is continuing efforts to get rid of its boom-time legacy assets. Sameer al Ansari, the chief executive, does not expect the third quarter to be any better than the last one. "It remains difficult to provide any guidance for the second half and beyond," he said. "Our results are strongly influenced by investor sentiment and activity."
Shuaa in May said it may launch three funds this year. It also sold its stake in Al Kout Industrial Projects and International General Insurance Company, generating more than Dh230m in cash. skhan@thenational.ae
