Dubai Stock Plunge Leads Middle East Rout After Global Selloff

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Dubai shares dropped the most in almost four months, leading Middle East equity declines, after investor concern global growth will slow sparked a selloff worldwide. Saudi Arabia’s stocks fell the most since March 2011.

The Dubai Financial Market General Index slid 6.5 percent to 4,619.60 at the close, the lowest level since July 20. Saudi Arabia’s Tadawul All Share Index retreated 6.5 percent to the lowest since July 22. Abu Dhabi’s ADX General Index slipped 3.5 percent, the most in almost four years, and Qatar’s QE Index closed 3 percent down.

“Global markets are all selling off and it’s that weakness we’re tracking,” Hisham Khairy, the Dubai-based head of institutional trade at Mena Corp. Financial Services LLC, said by phone. “There’s still more blood to come.”

Equities worldwide have lost about $4.4 trillion in value since reaching a record last month. Minutes of the Federal Reserve’s September policy meeting last week showed officials are concerned the U.S. economy may be at risk in a global slowdown. The International Monetary Fund last week reduced its forecast for global growth next year to 3.8 percent, from a July prediction of 4 percent.

The S&P 500 Index slumped 3.1 percent over the last five trading days and the Dow Jones Industrial Average dropped 2.7 percent. Bourses in Saudi Arabia, Qatar, Kuwait, and Oman were closed last week for a holiday, while Dubai, Abu Dhabi and Bahrain had a shortened trading week.

‘Defending Profits’

Dubai-based Emaar Properties PJSC, the developer of the world’s tallest building and the company with the biggest weighting on the emirate's index, fell 7.4 percent to 10.60 dirhams. Arabtec Holding Co., the United Arab Emirates’ largest listed developer, slumped 10 percent, the maximum allowed in a day, to 4.05 dirhams.

“Funds who bled out over the last few sessions globally will try to defend their profits and the first place they look for is the markets that have given them a decent return for the year,” Ahmed Shehada, the Abu Dhabi-based head of advisory and institutions at NBAD Securities LLC, said by e-mail.

Dubai’s benchmark index is the second-best performer in dollar terms this year among more than 90 tracked by Bloomberg, having advanced 37 percent. Qatar is the fourth best. Until today, Saudi Arabia's Tadawul was also in the top 10.

Oil Drops

Saudi Basic Industries Corp., the world’s biggest petrochemicals producer, led the Tadawul lower, retreating 6.9 percent, the most since March 2011. Al Rajhi Bank, the biggest listed Islamic bank in the world, dropped the most in more than three years.

Saudi Arabia is the biggest producer in the Organization of Petroleum Exporting Countries. Brent crude, a benchmark for more than half of the world’s oil, slipped 2.3 percent last week, its third weekly drop.

“People were just watching the global equity markets and the oil prices” during the break “and they just panicked,” Khaled Albraikan, Riyadh-based head of asset management at NCB Capital, which oversees about $12 billion, said by phone. “The fundamentals are still strong going forward. The rally the market has done over the past few months is taking a breather.”

Abu Dhabi’s First Gulf Bank PJSC led declines on the local gauge, losing 4.8 percent as 28 shares in the emirate retreated and seven rose. Aldar Properties PJSC dropped 8 percent, its biggest decrease since July 20.

Israel Slumps

Israel’s TA-25 Index dropped 2 percent to 1,433.80, the most in more than a year, as it resumed trading after a two-day break. Teva Pharmaceutical Industries Ltd. tumbled 2.9 percent, the biggest retreat in two months.

“The market was closed for the holiday, so we’re catching up with the U.S. market,” Gilad Alper, a senior analyst at Excellence Nessuah Brokerage in Petach Tikva, Israel, said by phone.

Egypt’s EGX 30 Index lost 4.1 percent, the most since June and extending a losing streak to five days. The measure jumped 20 percent last quarter to the highest in more than six years.

“We’ve been expecting a slow down after the gains we’ve seen since July,” Faris Fahim, vice president for international sales trading at Cairo-based HC Securities & Investment Co., said by phone. “We’re also following through with the declines seen across global equities after the IMF expressed concerns on economic growth.”

Oman’s MSM 30 Index slipped 2.2 percent, Kuwait’s SE Price Index retreated 1 percent while shares in Bahrain fell 0.3 percent. Iraq’s benchmark ISX General Index slumped 2.5 percent.

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