Dubai Shares Drop Most in 2 Months on Speculation Rally Overdone

Dubai’s benchmark stock index retreated the most in more than two months on investor speculation this month’s rally was overdone and after the Dubai Financial Market PJSC (DFM) posted its first full-year loss.

Dubai Financial Market, the only publicly traded Gulf Arab stock market, declined 4.2 percent. Aramex PJSC (ARMX) retreated the most in almost two months after the largest courier company in the Middle East reduced its dividend compared with 2010. The DFM General Index (DFMGI) fell 1.3 percent, the most since Dec. 21, to 1,654.20 at the 2 p.m. close in the emirate. The measure, which entered a bull market last week, has surged 27 percent from a low in January.

“We are at the point where our markets are likely to take a breather,” said Dubai-based Ibrahim Masood, who helps manage about $400 million at Mashreqbank PSC. (MASQ) “Local retail are doing the buying, and none of them are the kind to buy and hold; this hot potato is in slippery hands.”

Dubai’s stocks have soared 15 percent so far this month after companies reported improved earnings and dividends. The value of shares traded jumped to 713 million dirhams ($194 million) yesterday, the highest since April 2010, according to data compiled by Bloomberg. The value traded declined to about 469 million dirhams today.

Dubai Financial Market, which yesterday surged 8.5 percent, declined the most since Jan. 16 to 95.5 fils. The net loss for the group, including Nasdaq Dubai, was 6.9 million dirhams after a profit of 78.9 million dirhams a year earlier. Trading volumes in Dubai slumped to a six-year low in 2011, hurting the company’s revenues.

Oil Declines

Aramex dropped 3.1 percent, the most since Dec. 29, to 1.89 dirhams. The courier said the board proposed a dividend of 5 fils a share for 2011. That compares with the 7.5 fils it paid for 2010, according to data compiled by Bloomberg.

Oil fell, halting its longest rally in two years, after the International Monetary Fund warned that the global economy is still at risk of a slowdown. Oil for April delivery dropped as much as 1.4 percent to $108.24 a barrel in electronic trading on the New York Mercantile Exchange. Gulf Arab oil exporters, including Qatar and the United Arab Emirates, supply about a fifth of the world’s oil.

Qatar’s QE Index (DSM) fell 0.2 percent. Abu Dhabi’s ADX General Index (ADSMI) rose 0.1 percent in its seventh day of gains. Bahrain’s BB All Share Index (BHSEASI) increased 0.2 percent and Oman’s MSM 30 Index (MSM30) rose 0.5 percent. Saudi Arabia’s Tadawul All Share Index added 0.9 percent and the Bloomberg GCC 200 Index (BGCC200) increased 0.4 percent. Kuwait market was closed for a holiday.

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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