Dubai Shares Plunge to 10-Month Low as Gulf Stocks Drop on OilDana El Baltaji and Arif Sharif
Dubai’s benchmark stock index plunged to the lowest close since February, tracking declines in global equities as oil prolonged its slide.
The DFM General Index retreated 3.5 percent to 3,888.79, its lowest close since Feb. 5 and the longest losing streak since 2012. The Abu Dhabi ADX General Index slumped 2.4 percent, Qatar’s QE Index lost 2.3 percent and Saudi Arabia’s Tadawul All Share Index fell 1.8 percent. Emerging-market stocks declined for a third day led by energy companies after oil dropped to a five-year low.
“Weaker oil has put a dark cloud on the Gulf Cooperation Council markets,” Ahmed Shehada, head of advisory and institutions at NBAD Securities LLC in Abu Dhabi, said by e-mail. “While there is no reason for the impact to be so strong, foreign outflows have further stimulated this drop.”
The slump in crude prices has prompted investor flight across the oil-producing Gulf, with Saudi Arabia’s gauge falling into a bear market Nov. 30 and that of Dubai entering one yesterday. Brent, the benchmark for more than half the world’s oil, traded at $66.78 a barrel at 1:15 p.m. in London after sliding yesterday to the lowest level since September 2009.
The 12-member Organization of Petroleum Exporting Countries refrained from cutting output to shore up prices at a meeting in Vienna on Nov. 27. The GCC is home to about a third of the world’s proven oil reserves.
Emaar Properties PJSC, the real-estate developer that accounts for almost 18 percent of Dubai’s gauge, decreased 3.6 percent to 8.02 dirhams, the lowest since March 13. Investors had to own Emaar’s shares before Dec. 1 to receive a 1.257 dirham dividend.
“Emaar going ex-dividend was the key trigger for this current leg of declines,” Amer Khan, the Dubai-based senior executive officer at Shuaa Asset Management, said by e-mail. “There’s considerable value on offer in the United Arab Emirates. However, given the time of year and the volatility in oil prices, regional investors are likely to remain cautious.”
Stocks fell globally, led by the biggest rout in Chinese shares since 2009, as the country tightened collateral rules for short-term loans. Standard & Poor’s 500 Index futures retreated while MSCI’s Emerging Markets Index fell 1 percent.
The DFM General Index’s 14-day relative strength index declined to 22.7 today, the lowest since May 2012. A level below 30 indicates to some analysts that securities have fallen too far and are poised to rise. The measure has dropped below its 50-, 100- and 200-day moving averages, Bloomberg data show.
Oman’s MSM 30 Index declined 3.3 percent, Kuwait’s SE Price Index dropped 2 percent and Bahrain’s BB All Share Index slipped 0.3 percent.
“This is panic selling after the sharp drop triggered by oil prices, and most probably some short-selling in stocks such as Emaar,” Tariq Qaqish, fund manager at Al Mal Capital PSC, said by phone from Dubai today. “Some of the investors are tyring to book profit on what is remaining at the end of the year.”