Dubai’s benchmark stock index fell the most in a month, tracking a decline in global markets last week, on investor concern this year’s rally was overdone given prospects for earnings growth. Saudi Arabia’s gauge dropped.
The DFM General Index tumbled 1.7 percent, the most since March 12, to close at 4,759.15 in the emirate. Dubai Islamic Bank PJSC, the United Arab Emirates’ biggest shariah-compliant bank, declined for a third day. Emaar Properties PJSC, had its steepest drop in a month. Saudi Arabia’s Tadawul All Share Index fell 0.9 percent, while Al Rajhi Bank plunged the most in seven months as first-quarter profit trailed analysts’ estimates.
The Standard & Poor’s 500 Index and the Nasdaq Composite capped their worst week since 2012 on concern valuations had climbed too high as earnings season starts. Technology stocks led emerging market gauges to the biggest drops in three weeks after the U.S. threatened tougher sanctions against Russia over Ukraine. Dubai’s benchmark index trades at a price to estimated earnings ratio of 18.3 compared with 10.2 for the MSCI Emerging Markets Index, according to data compiled by Bloomberg.
“Considering the decline of international equity markets, especially the U.S., last week and the strong rally in the U.A.E. over the past two years, we do expect corrections,” Tariq Qaqish, a fund manager at Al Mal Capital PSC, said by e-mail. “Many of the positive catalysts are already priced in.”
Dubai Islamic Bank fell 2.9 percent to 6.31 dirhams. Emaar, which is planning an initial public offering of its malls business, declined 2.9 percent to 10.2 dirhams.
Shuaa Capital PSC, the investment bank controlled by Dubai’s ruler, surged as much as 5.3 percent after making a profit in the first quarter following three years of losses in such period. Lending and investment banking boosted earnings. It later retreated to close 0.6 percent higher at 1.72 dirhams.
Dubai-based Marka, which plans an entry into the U.A.E.’s fashion and restaurant businesses, begins an initial public offering to raise 275 million dirhams ($75 million) today.
Al Rajhi Bank fell 3.3 percent to 72.3 riyals. Saudi Arabia’s biggest listed lender said first-quarter net income fell 17 percent to 1.7 billion riyals ($453 million) versus estimates of 2.08 billion riyals, data compiled by Bloomberg show.
Qatar National Bank SAQ, the country’s largest lender, dropped 1.7 percent, the most in a month. Petrochemicals maker Industries Qatar fell 1.5 percent, the biggest in two weeks.
“The market had a good run the past couple of weeks so there is some profit taking especially given what is happening in the overall global markets,” Saugata Sarkar, head of research at Qatar National Bank Financial Services, said by phone from Doha today. “Given that we have a MSCI upgrade happening, there is still some upside.”
Markets in Doha and the U.A.E. will be added to the MSCI Emerging Markets Index in May from the frontier gauge.
In Egypt, the benchmark EGX 30 Index declined 0.3 percent, ending a four-day winning streak. The International Monetary Fund said April 11 it’s ready to provide technical and financial aid and that the North African country needs to lower fuel subsidies. Egypt has failed to agree a deal with the IMF after three years of on-and-off talks.
Benchmarks in Abu Dhabi and Kuwait both lost 0.2 percent while Bahrain fell fell 0.1 percent. Oman advanced 0.2 percent. Qatar’s QE Index declined 1.4 percent.
Israel’s TA-25 Index declined 1.2 percent with 16 stocks falling in Tel Aviv. Strauss Group shares fell 1.9 percent. The government may ease restrictions on food imports, Globes reported.
The yield on the government’s benchmark bonds due March 2023 fell three basis points, or 0.03 percentage point, to 3.14 percent. That’s the lowest since March 17. Israel markets will be closed April 14 and 15 for a holiday.