Dubai Stocks Lead Mideast Drop on Global Rout; Abu Dhabi Falls

Photographer: Duncan Chard/Bloomberg

Skyscrapers stand on the skyline viewed from the Central Market toward the Al Reem island development in Abu Dhabi, United Arab Emirates. Abu Dhabi’s gauge slid 1.8 percent, the biggest drop since Sept. 5. Close

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Photographer: Duncan Chard/Bloomberg

Skyscrapers stand on the skyline viewed from the Central Market toward the Al Reem island development in Abu Dhabi, United Arab Emirates. Abu Dhabi’s gauge slid 1.8 percent, the biggest drop since Sept. 5.

Dubai’s benchmark stock index retreated the most in more than two months, joining a global equities selloff. Abu Dhabi’s gauge had the biggest decline in almost five months.

The DFM General Index (DFMGI) fell 2.2 percent, the most since Nov. 11, to 3,733.70, in Dubai. The measure, which jumped at the end of last week, has more than doubled in the past 12 months. Emaar Properties PJSC (EMAAR), the emirate’s biggest real-estate developer, declined the most since Jan. 7, while Dubai Islamic Bank lost 2.6 percent. Abu Dhabi’s gauge slid 1.8 percent, the biggest drop since Sept. 5, as the United Arab Emirates’ government said the country’s president is recovering from a stroke.

Today’s declines follow a broader retreat in world markets last week, when China spurred investor concern that global growth will slow. The MSCI Emerging Markets Index lost 2.3 percent last week, while the Standard & Poor’s 500 Index posted the largest weekly slump since June 2012.

“Investors here are following this global weakness,” Montasser Khelifi, a Dubai-based senior manager for global markets at Quantum Investment Bank Ltd., said by phone. The president’s stroke may have “a limited effect on the market,” he said.

More Insight

Stocks tumbled last week and emerging-market currencies fell after data showed a manufacturing slowdown in China and U.S. applications for unemployment benefits rose, prompting investors to favor the safety of Treasuries over higher-risk equities.

“It’s hard to say to what extent” the declines will continue, Rami Sidani, the Dubai-based head of Middle East and North Africa investments at Schroder Investment Management Ltd. said by phone. “We need more insight on growth in China and other emerging markets in order to gauge where we are in the growth cycle.”

The yen rose as emerging-market currencies had the worst selloff in five years. Ten-year Treasury yields slipped to an eight-week low. Natural gas surged above $5 for the first time since 2010 on forecasts for cold weather in the U.S.

In the U.A.E., Sheikh Khalifa bin Zayed Al Nahyan suffered a stroke on Jan. 24, state-run WAM news agency reported. His brother, Sheikh Mohammed Bin Zayed Al Nahyan, is the Crown Prince of Abu Dhabi. In recent years, Sheikh Mohammed has been at the forefront of the U.A.E.’s foreign policy and has led efforts for closer economic and financial integration with Dubai, the country’s second-biggest emirate and commercial hub.

‘Profit Taking’

Dubai’s benchmark index on Jan. 23 jumped 3.6 percent, the most in more than four months, on speculation the emirate reached an agreement with neighboring Abu Dhabi on $20 billion of debt it received in 2009 to stave off a default.

Today’s declines are “normal profit taking,” Wadah Al Taha, the chief investment officer at Dubai-based Al Zarooni Group, said by phone. “It’s not related to what’s happening to the international market.”

Emaar declined 2.7 percent to 7.80 dirhams. Dubai Islamic Bank, Dubai’s largest Islamic lender, fell to 5.90 dirhams.

Egypt’s benchmark EGX 30 Index fell 0.2 percent following violence that marked the anniversary of the country’s 2011 uprising. At least 67 people were killed over the past two days in clashes between protesters and police as five bombings struck Cairo.

“The market has proved previously that it’s quite resilient to violence,” Tariq Hussein, the co-head of MENA sales trading at Cairo-based Commercial International Brokerage Co., said by phone. “Terrorism is something we’ll likely be living with for the foreseeable future. How it affects market sentiment will always come down to scale and damage.”

Presidential elections will be held before parliamentary elections, Interim President Adly Mansour said in a speech today. The government won’t hesitate to take “exceptional” measures if needed to combat terrorism, he said.

Israel Slump

Israel’s TA-25 Index (TA-25) fell 1.5 percent, the most since Aug. 27. The yield on the government’s benchmark bond due in March 2023 lost one basis point, or 0.01 percentage point, to 3.49 percent.

“Tel Aviv is following the sharp selloff in global equities,” said Zach Herzog, head of international sales at the brokerage unit of Psagot Investment House Ltd.

Teva Pharmaceutical Industries Ltd., the world’s biggest maker of generic drugs, lost 2.5 percent to 149.5 shekels, or $42.77, closing the gap to its U.S.-traded shares, which closed at $42.93 on Jan. 24.

Saudi Arabia’s Tadawul All Share Index and Qatar’s benchmark retreated 0.4 percent, while Oman’s fell 0.8 percent and Bahrain’s 0.2 percent. Kuwait’s measure added 0.1 percent.

To contact the reporters on this story: Sarmad Khan in Dubai at skhan170@bloomberg.net; Ahmed A. Namatalla in Cairo at anamatalla@bloomberg.net

To contact the editor responsible for this story: Samuel Potter at spotter33@bloomberg.net

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