Dubai Investments PJSC fell the most in more than a year on bets a rally that almost doubled the investment company’s shares in 2013 was overdone.
The Dubai-based company, which holds interests in dairy farms, publishers, real estate developers and pharmaceuticals, dropped 5.1 percent, the biggest decrease since May 2012, to 1.49 dirhams at the close in the emirate. The stock was the second-largest decliner on the benchmark DFM General Index, which lost 2.3 percent. About 65 million Dubai Investments shares traded, or 1.8 times the three-month daily average, data compiled by Bloomberg show.
Dubai Investments shares surged 85 percent in 2013 to the strongest level in more than four years on June 5, taking the stock’s price-to-earnings ratio to 13.3 times, the highest this year. The MSCI Emerging Markets/Financials Index trades at an average of 9.9 times earnings.
Dubai Investments “was up almost a 100 percent this year a few days ago,” said Amer Khan, a Dubai-based director at Shuaa Asset Management. Today’s “fall would be very normal profit booking,” he said.
The stock’s 14-day relative strength index climbed above 70 this month, a level that indicates to some investors that a security is poised to decline. It rose as high as 81 on June 5 before dropping to 64 today.
Dubai Investments, which almost doubled first-quarter profit, said last month it was “actively working on certain divestments which are expected to contribute significant returns going forward.”