United Arab Emirates shares fell the most in almost a week as concern the civil war in Syria may escalate hurt investor sentiment across the Middle East.
Dubai’s DFM General Index posted the biggest drop in the Middle East, losing 2.3 percent, the most since June 10, to 2,345.47 at the 2 p.m. close in the emirate. Emaar Properties PJSC, developer of the world’s tallest tower in Dubai, registered its biggest decrease since April. The ADX General Index fell 0.9 percent, while the Bloomberg GCC200 Index was down 0.2 percent.
Middle East shares are reacting after President Barack Obama said the U.S. would send light weapons to the Syrian opposition as the regime of Bashar al-Assad made military gains on the ground. Jordan’s King Abdullah II vowed today to act if the turmoil in Syria endangered the kingdom, while Egyptian President Mohamed Mursi urged an no-fly zone over Syria in a speech televised from Cairo yesterday. Egypt’s EGX 30 Index, which plunged into a bear market last week, fell 1 percent.
“Shares are tracking what happened yesterday in the Saudi market,” said Montasser Khelifi, Dubai-based senior manager for global markets at Quantum Investment Bank Ltd. “The drop is due to a mix of profit taking and concerns of escalation of the Syria conflict.”
The Arab world’s largest bourse in Saudi Arabia recovered after plunging the most in almost two years yesterday. King Abdullah interrupted his vacation in Morocco and returned to Jeddah because of “escalating concerns relating to events in the region,” the state-owned Saudi Press Agency said yesterday. The Tadawul All Share Index climbed 0.5 percent today, while Kuwait’s measure advanced 0.3 percent after earlier falling as much as 2.1 percent.
Yesterday’s 4.3 percent drop for the Tadawul also triggered selling in Qatar today, where the QE Index decreased 0.6 percent while Oman’s MSM30 Index retreated 1.1 percent, the most since March 27.
“The markets are reacting to what happened in the Saudi market yesterday on fears there could be an escalation to the Syria crisis,” said Nabil Farhat, a partner at Abu Dhabi-based Al Fajer Securities. The drop in U.A.E. markets may be temporary as the nation is isolated from regional tensions, according to Farhat.
Emaar, the third-biggest decliner on the BGCC200 Index, lost 2.6 percent, the most since April 18, to 5.63 dirhams.
The conflict in Syria, which has killed at least 93,000 people based on a United Nations’ study, is threatening to become a larger regional proxy war as the U.S. steps up its involvement in the conflict.
Elsewhere in the Middle East, Bahrain’s gauge was little changed and Israel’s benchmark TA-25 Index advanced 0.2 percent at the 4:30 p.m. close in Tel Aviv. The yield on the country’s benchmark 4.25 percent bonds maturing in March 2023 dropped 14 basis points, or 0.14 of a percentage point, to 3.70 percent.