Dubai Shares Extend Drop as Arabtec Contagion Drags Emaar DownSarmad Khan
Dubai shares slumped to the lowest in more than three months, led by property-related companies, after Arabtec Holding Co. fired hundreds of employees, according to three people familiar with the matter.
The DFM General Index fell 4.3 percent to 4,296, the lowest close since March 19 and a second day falling. Emaar Properties PJSC, the company with the largest weighting on the gauge, was the biggest decliner by index points, retreating 4.9 percent. Arabtec tumbled 9.9 percent after dismissing staff including senior managers, the people said, who asked not to be identified because the information is private.
“There is confusion in the market and I call it Arabtec fever,” Wadah Al Taha, chief investment officer of Dubai-based Al Zarooni Group, said by telephone. “The sentiment is very weak, and investors weren’t prepared for the situation getting so much worse.” In a worst case scenario the index could fall to 3,800, he said.
Dubai’s gauge entered a bear market after it plunged 20 percent since a peak in May, according to data compiled by Bloomberg. Shares soared this year amid a real estate recovery in the emirate before the United Arab Emirates’ central bank said June 8 there are signs the property market is overheating.
Two of the regularly traded stocks in the 30-member benchmark gauge were trading above their 50-day moving average price yesterday, according to data compiled by Bloomberg. That’s the fewest since July 2012 and compares with a one-year peak of 23 in December.
Arabtec, which has the fifth-highest weighting on Dubai’s index, has plunged 48 percent this month. Abu Dhabi state-run Aabar Investments PJSC cut its stake to 18.85 percent as of June 11 from 21.57 percent, stoking speculation the builder was losing government backing. The company’s shares plunged to 3.46 dirhams, the lowest since March 17. Emaar, developer of the world’s tallest tower, fell to 8.80 dirhams.