Dubai Shares Fall Most Since May on Egypt Unrest, Pacing Mideast Decline

Middle East shares dropped, sending Dubai’s index down the most in eight months, amid ongoing protests demanding the ouster of Egyptian President Hosni Mubarak. Israeli stocks and bonds declined.

Emaar Properties PJSC, which says it’s the largest foreign- direct investor in Egypt’s real-estate industry, lost 8.3 percent. Air Arabia PJSC fell the most since March. The DFM General Index plunged 4.3 percent, the most since May 25, to 1,543.02 at the 2 p.m. close in Dubai. The Bloomberg GCC 200 Index lost 0.3 percent. Egypt’s market was closed today after sliding 16 percent last week. It will remain shut tomorrow, Al Arabiya said.

“International investors are fleeing Middle East stock markets with justified risk aversion across the board,” said Mahdi Mattar, head of research at Abu Dhabi-based CAPM Investment PJSC, an investment banking company. “Due to panic from local and international investors, there is no discrimination between stocks with exposure or non-exposure to Egypt, though we expect that in coming sessions.”

Stocks worldwide plunged on Jan. 28, with the MSCI World Index declining 1.4 percent, while crude oil jumped 4.3 percent, the largest gain since 2009, after protesters posed the biggest challenge toMubarak’s 30-year rule.

Spillover

Egypt won’t hold auctions for government treasury bills today as lenders and the central bank are closed, said Mohamed Barakat, chairman of state-run Banque Misr, who is also the head of the country’s banking association.

As many as 150 people have been killed in the unrest, Ibrahim al-Zafarani, head of the rescue and emergency committee at the Arab medical union, told Al Jazeera television today. In Cairo’s central Tahrir Square, tens of thousands of people gathered, with some chanting “the people want the president out.”

Mubarak yesterday appointed Omar Suleiman, the country’s intelligence chief, as vice president, a sign he may be prepared to hand over power. Demonstrations began in Egypt on Jan. 25, inspired by an uprising that ousted Tunisian President Zine El Abidine Ben Ali on Jan. 14. Anger has also erupted in recent months in Yemen and Algeria. Like Egypt, both countries face spiraling food prices.

“The spillover effect of the political turbulence to the large countries in the Gulf Cooperation Council is non-existent as there are no similar drivers” in the region, said Yazan Abdeen, a Dubai-based fund manager who helps oversee $250 million at ING Investment Management (Dubai) Ltd. “Once Egypt reaches a resolution, we should see a bounce-back in Saudi, Qatar and the United Arab Emirates.”

DP World

Saudi Arabia’s Tadawul All Share Index rebounded, climbing 2.5 percent. The only market tracked by Bloomberg on Saturdays slumped 6.4 percent yesterday. Qatar’s QE Index slid 3 percent, the most since May 25, and Abu Dhabi’s ADX General Index retreated 3.7 percent. The GCC comprises Saudi Arabia, Qatar, the U.A.E., Oman, Bahrain and Kuwait.

Emaar, the builder of the world’s tallest skyscraper, dropped the most since January 2010 to 3.11 dirhams. The company’s Egyptian unit, Emaar Misr for Development S.A.E., has investments of about 29 billion dirhams ($8 billion) in the North African country, according to its website. Separately, Emaar sold $500 million of Islamic bonds, its first sukuk in more than six years, on Jan. 27.

Air Arabia, the low-cost carrier with a hub in Alexandria, Egypt, slumped 6.1 percent to 78.6 fils. DP World Ltd. fell 6.2 percent, the most since December 2009, to 62 cents. The Dubai- based company operates marine terminals at Egypt’s Sokhna Port at the southern entrance to the Suez Canal.

Israel Stocks

The yield on Dubai’s $750 million, 7.75 percent notes maturing October 2020 rose 11 basis points to 8.2 percent on Jan. 28, the highest level in three weeks. Dubai credit-default swaps climbed 33 basis points to 453 at the end of last week, according to prices provided by CMA DataVision.

Israel’s TA-25 Index decreased 3.8 percent, the most since March 2009, at the 4:30 p.m. close in Tel Aviv. Ampal-American Israel Corp., the owner of a stake in Egypt’s East Mediterranean Gas Co., plunged the most in almost two years. Israeli government bonds fell, pushing the yield on the Mimshal Shiklit maturing in January 2020 up 7 basis points to 4.92 percent.

Kuwait’s SE Price Index declined 1.8 percent, Oman’s MSM30 dropped 3 percent, while Bahrain’s BB All Share Index fell 1.4 percent.

Credit-default swaps conceived to protect bondholders against default pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.

-- With assistance from David Wainer in Tel Aviv. Editors: Susan Lerner, Tim Farrand.

To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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