Dubai Shares Drop Most in More Than Year Before MSCI Decision

Dubai’s shares fell the most in more than a year as investors await an MSCI Inc. decision on whether the United Arab Emirates will be upgraded to emerging-market status. Stocks in Abu Dhabi also declined.

Dubai Financial Market, the only publicly traded stock exchange in the Gulf Cooperation Council, fell the most in four months. Dubai Investments PJSC posted its biggest drop in more than a year. The benchmark DFM General Index decreased 2.3 percent, the largest retreat since March 2012, to 2,344.76. It was the world’s third-worst performer today among 94 indexes tracked by Bloomberg.

The U.A.E. and Qatar are under consideration for a fifth year for a possible upgrade from frontier market status at MSCI. Both countries could be promoted after they improved market accessibility, HSBC Holdings Plc said in a report dated May 31. Indexes by MSCI, which is due to announce its decision June 11, are tracked by investors managing about $7 trillion.

“The market is nervous prior to the MSCI’s decision,” said Montasser Khelifi, a Dubai-based senior manager for global markets at Quantum Investment Bank Ltd. “Despite all the positive signs and the rationale for the upgrade, we are still not sure of the outcome.”

Khelifi expects both the U.A.E., the second-largest Arab economy, and Qatar, the world’s biggest exporter of liquefied natural gas, to be upgraded. The reclassification could lead to about $370 million flowing into the U.A.E. and more than $430 million into Qatar, according to HSBC Holdings Plc estimates.

Qatar’s QE Index rose 0.4 percent today, taking its advance in 2013 to 12 percent. Indexes in Dubai and Abu Dhabi are among the 10 best-performing equities indexes this year among 94 gauges tracked globally by Bloomberg, with rallies of 45 percent and 35 percent, respectively.

Dubai Investments was the most-actively traded stock on the DFM today. The shares fell 5.1 percent, the biggest slump since May 2012. Dubai Financial Market declined 3.5 percent, the most since Feb. 3, to 1.92 dirhams. Abu Dhabi’s index fell 1 percent.

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