Persian Gulf Shares Fall After Liquidity Plan, Led by Emaar

By Zainab Fattah

Sept. 23 (Bloomberg) -- Persian Gulf shares declined on concern the U.S. financial-industry bailout won't prevent a recession and that banks in the region may face difficultly accessing funds for their day-to-day operations.

Emaar Properties PJSC led real-estate stocks lower. First Gulf Bank PJSC slid even after saying it had ``minimum indirect exposure'' to Lehman Brothers Holdings Inc.'s bankruptcy. Emirates Telecommunications Corp. fell on a report of acquisition plans. Ahli Bank retreated for first time in five days.

The United Arab Emirates central bank set up a 50 billion- dirham ($14 billion) fund for banks to ease liquidity constraints caused by the seizure of global credit markets and Kuwait said it was studying a similar move.

``Investors worry the rescue plan in the U.S. may not be enough and see the 50 billion dirhams pumped into the U.A.E. banking system as a negative,'' Fadi Mansour, sales manager at Al-Futtaim HC Securities in Dubai, said in a telephone interview. ``It means the banks may have a liquidity problem and may be too exposed to real estate.''

The Dubai Financial Market General Index fell 3.2 percent to 4,065.04 at 11:46 p.m. local time. In the past two days, the measure has erased more than half of the 9.9 percent surge on Sept. 21. The Abu Dhabi Securities Exchange General Index lost 2.5 percent, while Oman's Muscat Securities Market 30 Index decreased 1.2 percent.

Interbank lending in the U.A.E. has been hit by ``liquidity constraints in international money markets,'' the Abu Dhabi-based central bank said in an e-mailed statement yesterday. The central bank said it has also considered additional resources to further support banks operating in the U.A.E.

Emaar Drops

The MSCI Asia Pacific excluding Japan Index dropped 1.9 percent to 353.29 in Hong Kong. The Standard & Poor's 500 Index lost 3.8 percent yesterday, erasing almost half of its rally over the previous two days.

Emaar Properties PJSC, the Middle East's biggest publicly traded real-estate company, lost 2.2 percent to 7.64 dirhams. Sorouh Real Estate Co. slid 7.3 percent to 6.1 dirhams, its biggest one-day drop since Sep. 7.

First Gulf Bank slumped 6.9 percent to 15.65 dirhams. The ``minimum indirect exposure through derivatives'' to Lehman will have ``no impact'' on First Gulf's profit and loss, it said today in an e-mailed statement.

Kuwait

Emirates Telecommunications, known as Etisalat, fell 1.5 percent to 16.95 dirhams. The company may pay $1.3 billion for a 49 percent stake in Swan Telecom, which has acquired licenses to offer telephone services in India, Business Standard reported, without saying where it got the information.

Ahli Bank retreated 6.7 percent to 0.251 rials. The Omani lender formerly known as Alliance Housing Bank SAOG gained 14 percent in the previous four days.

The Kuwait Stock Exchange Index retreated 1 percent, while the Bahrain All Share Index declined less than 0.1 percent. Qatar's Doha Securities Market Index added 1.3 percent, bringing the three-day advance to 12 percent. Saudi Arabia's market is closed today for public holiday.

The following stocks also rose or fell in the region. Stock symbols are in parentheses after company names:

Emirates Integrated Telecommunications Co. (DU UH) fell 1.6 percent to 4.87 dirhams. The United Arab Emirates' second-biggest mobile-phone company signed an agreement with Zain Saudi Arabia to exempt their subscribers from roaming fees when traveling between the U.A.E. and Saudi Arabia, according to a statement on the Saudi bourse Web site.

To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net.