Dubai Stocks Lead Mideast Declines as Real Estate Shares Drop

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Real-estate and construction companies dragged Dubai’s stocks to the lowest level in five weeks as equity gauges across the six-nation Gulf Cooperation Council retreated.

Dubai’s DFM General Index slid 1.7 percent to close at 4,049.98, pulled lower by a 2 percent declined in the Dubai Financial Market Real Estate Index. Emaar Properties PJSC, the developer with the biggest weighting on the gauge, dropped the most since May 4. Arabtec Holding slipped to the lowest level since April 2 after a newspaper reported that Egypt ended talks with the construction company to build 1 million housing units.

“It’s more of a knee-jerk reaction from retail investors on Arabtec,” Ahmed Shehada, the head of advisory and institutions at NBAD Securities LLC, the brokerage of the United Arab Emirates’ biggest bank, said by phone. “There’s nothing from the company or the Egyptian government and the market is awaiting clarity.”

The Egyptian government rejected Arabtec’s conditions to fund the project from local banks, Cairo-based Al Mal newspaper reported today, citing a housing ministry official it didn’t identify. The company’s spokesman didn’t immediately respond to requests for comment by e-mail or telephone.

The stalled project would be a blow to Arabtec, whose shares never fully recovered from a 65 percent slump between May and June last year as Chief Executive Officer Hasan Ismaik resigned and a number of top managers were dismissed. Chairman Khadem Al Qubaisi and founder Riad Kamal were are also excluded from the board this year. Arabtec retreated 3.3 percent to 2.33 dirhams and Emaar dropped 1.5 percent to 8.08 dirhams.

Mosque Attack

Saudi Arabia’s Tadawul All Share Index slipped 0.4 percent to 9,732.52, the weakest closing level since May 20, after a suicide bomber struck a Shiite mosque in the country's oil-rich eastern region on Friday, stoking concern that attacks within the borders of OPEC’s biggest crude exporter are mounting.

Islamic State claimed responsibility for the attack, which killed at least 21 people. Saudi Arabia is leading a military intervention against Shiite rebels in Yemen and playing a part in U.S.-led operations against Islamic State in Syria.

The bomb “adds a new, most unwelcome dimension in terms of the country’s security that’s weighing on the Tadawul today,” Julian Bruce, the head of institutional trading at EFG-Hermes U.A.E. Ltd. in Dubai, said by e-mail. A slump in oil prices and the headwinds facing the United Nations-sponsored peace talks on Yemen are also adding to selling pressure, he said.

Saudi Basic Industries Corp., the world’s biggest petrochemicals manufacturer by sales, dropped 2.5 percent after Brent crude, the benchmark for more than half of the world’s oil, sank 1.8 percent to $65.37 per barrel on Friday. The GCC holds almost a third of the world’s proven oil reserves.

Saudi Arabia’s government-run fund General Organization for Social Insurance last week reduced its stake in Saudi Investment Bank to 17.26 percent from 21.51 percent and cut its holding in Alinma Bank by almost half from a previous 10 percent. It pared its stake in Saudi Arabian Mining Co. to 8 percent from 8.14 percent, according to the fund’s shareholding data posted on the bourse’s website.

Egypt Inflows

Qatar’s QE Index was little changed, while Kuwait’s SE Price Index lost 0.3 percent and Bahrain’s BB All Share Index decreased 0.6 percent. Oman’s MSM 30 Index slipped 0.1 percent. Abu Dhabi’s ADX General Index slumped 0.7 percent.

Egypt’s EGX 30 Index rose 1.5 percent, extending gains after its best week in almost two years. The government last week postponed taxing bourse profits for two years, a decision that drew criticism from the International Monetary Fund.

“Turnover is picking up significantly,” Mohamed Radwan, the head of equities at Cairo-based Pharos Holding, said by phone. “The capital gains tax delay has triggered inflows from local and regional investors, and we’re seeing that continue.”

The value of shares traded on the bourse rose to 748 million Egyptian pounds ($98 million) on May 21, compared with a 12-month daily average of about 630 million pounds. Shares worth about 653 million pounds changed hands. Palm Hills Developments SAE, the luxury property developer, added 5.8 percent after reporting it’s close to getting a 750 million-pound loan.

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