Dubai’s Shares Retreat to Month Low on U.S. Deficit Impasse, Europe Risk

Dubai’s shares slumped to the lowest in almost a month led by Emaar Properties PJSC (EMAAR) on concern a U.S. political impasse over the nation’s budget deficit and Europe’s debt woes may hurt global economic growth. Oil fell.

Emaar, developer of the world’s tallest skyscraper, decreased 1.9 percent. Dubai Financial Market PJSC, the only publicly traded Gulf Arab stock market, slumped to the lowest since February 2009. Dubai’s DFM General Index (DFMGI) slipped 0.9 percent to 1,355.18, the lowest level since Oct. 26, at the 2 p.m. close in the emirate. The measure is down 17 percent this year. The MSCI Emerging Markets Index declined for a fifth day, sinking 2.1 percent at 12:35 p.m. in London.

“We cannot alienate local markets from what’s happening globally,” said Mohammed Ali Yasin, chief investment officer at Abu Dhabi-based CapM Investment PJSC. “Because we are nearing the end of the year, companies will avoid making any adventurous decisions and movement is very slow.”

In the U.S., a deficit-cutting congressional supercommittee probably will announce today it has failed to reach an agreement on at least $1.2 trillion in federal budget savings, a Democratic aide said. The aide, who wasn’t authorized to discuss internal matters publicly and requested anonymity, said in an e- mail that it was highly unlikely that the talks could be salvaged. Futures on the Standard & Poor’s 500 Index decreased 1.6 percent.

A ‘Firewall’

Europe’s sovereign debt crisis threatens to send the economy of the 17-member euro region into a recession that would spur losses in the U.S. The benchmark Stoxx Europe 600 Index declined 2.4 percent. The region needs a “firewall” to prevent its debt crisis from spreading and should increase the size of its rescue fund, Deutsche Bank AG Chief Executive Officer Josef Ackermann said yesterday.

Crude oil for January delivery fell as much as 2.1 percent to $95.61 a barrel in electronic trading on the New York Mercantile Exchange. Gulf Arab oil exporters including the U.A.E. and Qatar supply about a fifth of the world’s oil.

Emaar dropped to 2.54 dirhams, the lowest since Oct. 26. The Dubai Financial Market (DFM) tumbled 4.3 percent to 90.4 fils, bringing its drop for the past year to 41 percent.

About 61 million shares traded today in Dubai, compared with a 12-month daily average of 103 million, according to Bloomberg data. The value of shares traded on Dubai’s stock market slumped to 19.5 million dirhams ($5.3 million) on Nov. 16, the lowest since August 2004, data compiled by Bloomberg showed.

“The continued loss of liquidity is making this market more and more risky to be in,” said Saad al Chalabi, an institutional trader at Al Ramz Securities in Abu Dhabi.

The Bloomberg GCC 200 Index (BGCC200) lost 1.2 percent, the most since Sept. 12, and Abu Dhabi’s ADX General Index (ADSMI) retreated 0.4 percent. Qatar’s QE Index (DSM) declined 1.4 percent. Kuwait’s SE Price Index dropped 0.7 percent. Bahrain’s benchmark slumped 1.3 percent, snapping a four-day rally. Saudi Arabia’s Tadawul All Share Index (SASEIDX) and Oman’s MSM30 Index (MSM30) declined 0.9 percent.

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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