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Dubai Stocks Fall Third Day on Bets Rally Overdone; Qatar Drops

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May 18 (Bloomberg) -- Dubai’s benchmark index dropped a third day in the longest losing streak in more than three months, amid bets the rally before the United Arab Emirates’ upgrade to emerging market status is overdone. Qatar fell.

The DFM General Index declined 0.9 percent to 5,135.95 in Dubai, marking the longest retreat since Feb. 2. The index has gained 52 percent this year. Emaar Properties PJSC slid 1.9 percent and Dubai Islamic Bank PJSC lost 1.2 percent. Qatar’s QE Index fell 0.6 percent and Abu Dhabi’s gauge dropped 0.7 percent to the lowest in six weeks.

The change at index provider MSCI Inc. may attract more than $649 million of funds to Qatar and $905 million to the U.A.E., according to HSBC Holdings Plc. MSCI, whose gauges are tracked by investors managing about $8 trillion in assets, on May 14 named companies from the U.A.E. and Qatar including Emaar and DIB to its developing-markets gauge starting next month.

“It’s the same as buy the rumor and sell the fact,” Hisham Khairy, the Dubai-based head of institutional trade at Mena Corp. Financial Services LLC, said by phone today. “Everybody was expecting a correction after the MSCI upgrade but it started a bit early.”

Debut Trade

Emaar, the stock with the biggest weighting on Dubai’s measure, closed at 10.25 dirhams, the lowest level in a week, trimming its gain this year to 48 percent. Aldar Properties PJSC, the largest listed developer in Abu Dhabi, plunged 3.2 percent, the most since May 11, to 3.91 dirhams.

U.A.E. property prices are “beginning to stabilize” and the International Monetary Fund has already warned that the country needs to do more “to avoid another bubble,” Ramez Merhi, director of asset management at Dubai-based Al Masah Capital, said in e-mailed comments.

DIB, the largest Sharia-compliant lender in the country, fell to 7.61 dirhams, its weakest since May 4.

Egypt’s benchmark EGX30 Index closed 0.3 percent lower at 8,532.01, ending a five-day winning streak.

Arabian Cement shares surged as much as 56 percent to 14 Egyptian pounds in their trading debut today, before closing at 10.39 pounds. The IPO was the country’s first since 2010.

‘Euphoria’

“There is the euphoria of a new IPO but I believe it is trading now at multiples very close to listed cement companies,” said Wafik Dawood, director of institutional sales at Cairo-based Mega Investments Securities. “It started at a discount compared with other cement companies, so what it's doing is fixing its price.”

Saudi Arabia’s, Kuwait’s and Bahrain’s gauges were little changed while Oman’s measure increased 0.2 percent.

Israel’s TA-25 Index increased 0.4 percent, led by Perrigo Co. Israel Chemicals Ltd., which harvests Dead Sea minerals to make fertilizers, declined 2.1 percent to 30.63 shekels, the most since April 23, after a government panel recommended a windfall tax on natural resources. Biopharmaceutical company Kamada Ltd. plunged 36 percent, the most on record, to 30.12 shekels after the results of a clinical trial in Europe disappointed investors.

The yield on the government’s benchmark bonds due March 2024 dropped 11 basis points to 3.01 percent.

(An earlier version of this story corrected the closing price of Arabian Cement in the ninth paragraph.)

To contact the reporter on this story: Sarmad Khan in Dubai at skhan170@bloomberg.net

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

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