Dubai Stocks Drop Most in Two Months on Bets Rally OverdoneArif Sharif
Dubai’s benchmark stock index dropped the most in more than two months, led by developer Emaar Properties PJSC, on bets gains this year are overdone.
The DFM General Index slid 2.8 percent, the most since Sept. 4, to 2,822.71 at the close, trimming gains for the year to 74 percent. Volumes surged, as shares valued at about 890 million dirhams ($242 million) traded, compared with a six-month average of 773 million dirhams. Emaar, the developer of the world’s tallest skyscraper, fell the most since Sept. 3, while Dubai Islamic Bank PJSC, the emirate’s biggest Shariah-compliant lender, lost 2.7 percent before reporting results.
Dubai’s benchmark index is among the five best performing gauges tracked by Bloomberg globally this year as the emirate’s real-estate industry rebounds from a more than 60 percent decline. Shares have also gained amid bets the emirate will win a bid this month to host the World Expo in 2020. Dubai’s measure trades at an estimated price-to-earnings multiple of 15 compared with 12 for the MSCI Emerging Markets index.
“The market is taking a breath,” Sebastien Henin, an Abu Dhabi-based portfolio manager at The National Investor, said in an e-mail. “Dubai is a very volatile market and I guess the closer we get to the announcement of Dubai 2020 the volatility will increase.”
Emaar fell 3.4 percent to 5.89 dirhams. Dubai Islamic Bank lost the most since Sept. 4 to 4.03 dirhams. Third-quarter profit surged 67 percent to 499.8 million dirhams, according to Bloomberg calculations based on nine-month figures released after markets closed.
Dubai’s economy, the second-biggest among the seven sheikhdoms that make up the United Arab Emirates, is set to expand an average 4.6 percent a year between 2012 and 2015, more than twice the rate of the previous four years, according to government forecasts. Annual economic growth will be boosted by about 0.5 percentage points in the run-up to the Expo and by about 2 percentage points during the event should Dubai be selected, Bank of America Merrill Lynch said Sept. 23.