Dubai Shares Head for Biggest Drop Since August After Rally

Dubai’s stocks headed for the biggest drop in almost seven months on bets this year’s rally was overdone and as investors awaited a report that may confirm Europe’s economy contracted in the fourth quarter.

Emaar Properties PJSC (EMAAR), developer of the world’s tallest skyscraper, dropped to the lowest intraday level in two weeks. Dubai Financial Market PJSC, the only publicly traded Gulf Arab stock market, declined 4.8 percent. The DFM General Index (DFMGI) fell 2.6 percent, set for the biggest decrease since Aug. 7, to 1,708.98 at 12:42 p.m. in the emirate. The measure, which entered a bull market in February, surged 31 percent from a January low.

“Investors are booking some of their profits on the Dubai Financial Market after a series of good performance,” said Samer Darwiche, a Dubai-based analyst at Gulfmena Investments.

Dubai’s stocks have soared 26 percent so far this year after companies reported improved earnings and dividends. That compares with an 8.2 percent increase in the Bloomberg GCC 200 Index. (BGCC200) The value of shares traded in Dubai jumped to 981 million dirhams ($267 million) on March 5, the highest since April 2010, according to data compiled by Bloomberg. The value traded declined to about 624 million dirhams today.

European Contraction

In Europe, the Stoxx 600 Index (SXXP) decreased 0.8 percent as investors weighed prospects for private-creditor participation in Greece’ debt restructuring. U.S. index futures and Asian shares (MXAP) also dropped. Economists expect the first details of European fourth-quarter gross domestic product to confirm a flash estimate that showed a headline contraction of 0.3 percent quarter over quarter as household consumption and gross fixed capital formation shrank, according to a survey.

Emaar retreated 2.3 percent to 2.98 dirhams, the lowest since Feb. 21. Dubai Financial Market (DFM), which yesterday surged 4.2 percent, declined the most since Jan. 16 to 1.17 dirhams.

Emirates Integrated Telecommunications Co. (DU) decreased for a second day, falling 2.5 percent to 3.1 dirhams. The United Arab Emirates’ second-biggest phone company said full-year profit dropped 16 percent as royalty to the government increased and that it plans to pay its first dividend.

Qatar’s QE Index (DSM) fell 0.4 percent and Abu Dhabi’s ADX General Index (ADSMI) dropped 0.3 percent. Bahrain’s BB All Share Index (BHSEASI) and Oman’s MSM 30 Index (MSM30) rose 0.1 percent. Saudi Arabia’s Tadawul All Share Index (SASEIDX) added 0.5 percent in its 14th day of gains, the longest winning streak since August 2005. The Kuwaiti gauge advanced 0.3 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