To: tejek who wrote (309208 ) 11/6/2006 12:56:19 AM From: Elroy Read Replies (1) | Respond to of 1576909 DFM index plunges to two-year low By Arif Sharif, Staff Reporter gulfnews.com Dubai: Dubai shares plunged to their lowest in nearly two years and Abu Dhabi sank to a new annual low as recent losses in neighbouring Saudi Arabia and margin calls from banks took their toll on the market. But the fall presents an attractive buying opportunity as economic fundamentals are strong and companies had posted robust core earnings in the nine months to September, analyst said. Investors were already looking ahead at the initial share offer of the Dubai Financial Market, that opens on November 12, and speculating on various subscription scenarios. "To be honest, Saudi Arabia might have affected the market after falling 17 per cent in the past two weeks. Some margin calls also kicked in as prices began to fall," said Amro Diab, who manages institutional sales for brokerage EFG-Hermes. The Dubai Financial Market index fell 3.63 per cent to 388.31 points but trading was brisk with shares worth Dh1.43 billion changing hands. Fifteen shares fell, three remained unchanged and only one rose. This was the lowest close for the index this year, worse than the 393.75 hit on July 29 and the lowest since December 9, 2004. The Abu Dhabi market fell 1.68 per cent to 3,233.49 in thin volumes worth Dh109.5 million. Sentiment was weak throughout the region with Kuwait, Doha and Bahrain all posting losses but Saudi Arabia rebounded yesterday, rising 2.1 per cent to 8,978.69 points. Many UAE investors borrow money from banks to buy shares but a fall in prices triggers loan recalls and leads to further sell-offs. Earlier this year as well, the markets dipped sharply as panic selling by investors led banks to call in their loans. Market heavyweight Emaar Properties, which made up 47 per cent of total value of shares traded in Dubai, dipped 3.05 per cent to Dh12.70, well below its fair value target of Dh18.74 set by investment Shuaa Capital. P Krishna Murthy, who heads the financial services division of the Al Rostamani Group, told Gulf News that investor sentiment was hit by falling oil prices and the recent fall in the Saudi Arabian market. "None of the oil companies are listed so the market does not really reflect the economy completely. But this is the time to buy as the market has great upside potential," he said. UAE companies posted mixed results in the third quarter but their core earnings are up 30 per cent in the nine months to September after stripping out market-related losses. Analysts said investors had also begun speculating on the oversubscription for the upcoming DFM and the cost to buy shares using bank finance. DFM announced on Saturday it would raise Dh1.6 billion through its IPO.