Dubai Shares Fall on Concern Rally Is Overdone; Kuwait Rises

Dubai’s shares fell for the second time this week amid concern the recent rally was overdone and as investors awaited third-quarter earnings.

Emirates NBD PJSC (EMIRATES), the United Arab Emirates’ biggest bank by assets, fell the most in more than a week, while logistics company Aramex PJSC (ARMX) dropped the most since Aug. 28. Drake & Scull International PJSC (DSI), the Dubai-based electrical and mechanical engineering company, retreated 1.4 percent. The DFM General Index (DFMGI) declined 0.3 percent to 1,550.13 at the close, while the Bloomberg GCC 200 Index was little changed.

Dubai’s benchmark index has still gained 6.8 percent this quarter amid speculation the U.S. Federal Reserve will act to boost growth in the world’s biggest economy and as oil prices climbed. It has lost 2.4 percent in the two weeks since Aug. 23.

“There was some foreign institutional interest in names like Emaar through the summer but there is a lack of regional catalysts to drive the market higher in the third quarter,” Amer Khan, a fund manager at the asset management division of Shuaa Capital PSC (SHUAA), said by e-mail. “Consolidation at these levels would be a big positive going into third-quarter earnings.”

Federal Reserve Chairman Ben Bernanke, in an Aug. 31 address to central bankers and economists at Jackson Hole, Wyoming, defended the effectiveness of unconventional monetary policies such as bond purchases and signaled he would soon deploy them again to attack unemployment. An unexpected drop in Chinese manufacturing in August spurred bets the government will announce further measures to stimulate the economy.

2012 Gain

Emirates NBD fell 1 percent to 3.03 dirhams, while Aramex dropped 1.1 percent to 1.79 dirhams. Drake & Scull declined to 861 fils.

“Investors will look for reasons to put capital to work and hopefully with the fundamental picture in Dubai continuing to improve they’ll find it through the earnings season,” Khan said.

Dubai’s benchmark index has advanced 15 percent this year, the most in the six-nation Gulf Cooperation Council. The measure dropped 17 percent last year and 9.6 percent in 2010. The index trades at a price-earnings multiple of 14.2.

Dubai’s economy has improved this year helped by a rebound in tourism, trade and logistics. Passenger traffic at Dubai International Airport, home to the world’s biggest international airline, Emirates, rose 12 percent in the seven months through July to 32.9 million, the state-owned facility said today.

Elsewhere in the region, Bahrain’s measure rose 0.2 percent. Qatar’s QE Index fell 0.2 percent and Kuwait’s gauge increased 0.3 percent. Abu Dhabi’s measure added 0.2 percent and Saudi Arabia’s Tadawul All Share Index (SASEIDX) retreated 0.2 percent.

To contact the reporter on this story: Arif Sharif in Dubai at asharif2@bloomberg.net

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

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.