Dubai’s shares fell the most in almost three weeks, led by Arabtec Holding Co., as investors bet the market’s world-beating rally has lost steam.
The DFM General Index retreated 4.1 percent to 4,771.10 at the close, making it the worst performer so far today among more than 90 gauges tracked globally by Bloomberg. Shares of construction company Arabtec plunged 9.7 percent, the most since March 2013, and Emaar Properties PJSC dropped 3.7 percent, after the United Arab Emirates’ central bank said the country’s property market may be overheating.
“Due to the high profits that people have been able to generate over the past year, you may see continuous selling pressure on the market,” Mohammed Ali Yasin, managing director of NBAD Securities in Abu Dhabi, said by phone today. “Breaking the 5,000 level yesterday was a negative signal” and there could be support at 4,750, he said.
Dubai’s index is the best-performer globally in dollar terms this year, as the sheikhdom’s economy is estimated to expand at the fastest pace since 2007. The rally pushed valuations to 16.7-times earnings, compared with 11-times for the MSCI Emerging Market Index, according to data compiled by Bloomberg.
The U.A.E. central bank said yesterday that rental yields in Dubai and Abu Dhabi had fallen below historical averages as real estate prices rose, indicating the market may be imbalanced.
Arabtec slid to 5.42 dirhams, the lowest since April 20. The largest publicly traded builder in the U.A.E. has surged 164 percent this year after announcing a deal to build 1 million homes in Egypt, and as the company’s chief executive officer tripled his holding in the company.
“You don’t really hear negative news coming from the U.A.E. central bank, and the news on the property market overheating came as a surprise,” Nayal Khan, head of institutional sales and trading at Naeem Holding in Dubai, said by phone today. “Retail investors were largely spooked, which added to selling pressure.”
Emaar, developer of the world’s tallest tower in Dubai, and the company with the largest weighting on the index, declined to 9.58 dirhams, the lowest since May 21.
Hisham Khairy, the Dubai-based head of institutional trade at Mena Corp. Financial Services LLC., changed his positive view on the market in a note to investors before the market opened today. The index could see a “further correction towards the 4,200 level,” he said.