Dubai Shares Post Fifth Monthly Drop as Oil Curbs Risk Appetite

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Dubai stocks slid to a three-week low, capping a fifth monthly decline for the benchmark share index, as plunging crude oil prices curbed appetite for risky assets. Saudi stocks slipped, paring their best month since August.

The DFM General Index fell 1.7 percent to close at 3,674.40, the weakest level since Jan. 8, bringing its retreat in January to 2.6 percent in January and extending the longest stretch of monthly losses since 2011. Saudi Arabia’s Tadawul All-Share Index decreased 0.4 percent, trimming its advance this month to 6.5 percent. The MSCI Emerging Markets Index slipped the most in three weeks as of 7:44 p.m. in Dubai.

Equities in the six-nation Gulf Cooperation Council are trading at their most volatile levels since February 2009, underscoring the region’s vulnerability to oil prices. The BGCC200 Index, which tracks the 200 biggest and most liquid stocks in the Persian Gulf, fell 0.9 percent on Thursday, the steepest decline since Jan. 6, as crude traded near a six-year low. The GCC accounts for about a third of the world’s proven oil reserves.

“The sentiment in the markets is weak and investors are tracking the drop in international markets,” Montasser Khelifi, a Dubai-based senior manager at Quantum Investment Bank Ltd., said by phone today. “The overriding theme is oil.”

Oil has tumbled about 40 percent since the Organization of Petroleum Exporting Countries decided to maintain output levels on Nov. 27, choosing to let rival producers curb their supplies first to alleviate a global glut. Brent, which sank 2.3 percent to $48.47 a barrel in London on Wednesday, traded at $48.94 on Thursday.

Topping Estimates

Emaar Properties PJSC, developer of the world’s tallest tower in Dubai, led losses in the city with a 2.9 percent drop. Dubai Islamic Bank PJSC, the biggest Shariah-compliant lender in the United Arab Emirates, slid 2.5 percent to the lowest close in more than two weeks.

Abu Dhabi’s shares were dragged lower by National Bank of Abu Dhabi PJSC, the largest bank in the U.A.E., which lost 5.5 percent even after reporting fourth-quarter profit that topped analyst estimates. Qatar’s QE Index ended January with a decrease of 3.1 percent, and along with Abu Dhabi’s gauge, posted the fourth monthly loss.

Saudi Arabia’s Tadawul All Share Index fell for the first time since the late King Abdullah died on Jan. 23. The gauge had rallied 5.8 percent in the three trading days since Friday as the monarch’s successor, King Salman, pledged to maintain Abdullah’s policies and the market regulator said the Arab world’s largest bourse is on track to open to foreign investors in the first half.

Regulatory Spotlight

Kuwait’s shares fell 1 percent, while Bahrain’s were little changed. Equities in Iraq extended a 15-day losing streak, dropping 33 percent in period. Egypt’s EGX 30 Index declined 0.2 percent, posting its best monthly performance since July 2013.

Israel’s TA-25 Index retreated 0.4 percent, led by Teva Pharmaceutical Industries Ltd., as the gauge had its second monthly drop. Bezeq Israeli Telecommunication Corp. gained 0.1 percent, curbing a loss in January to 9.6 percent.

“Companies that are suffering from the brunt of the regulatory spotlight, like Bezeq and gas explorers, led the index lower this month,” Ori Licht, head of research at Israel Brokerage & Investments Ltd. in Tel Aviv, said by phone.

Israel’s Communications Ministry set tariffs for a wholesale telecommunication market in November in an effort to induce competition in fixed-line telephony, which is dominated by Bezeq. The company’s shares had their worst month since June 2012.

Shares of oil explorers Avner Oil Exploration LP and Delek Drilling LP have dropped more than 10 percent each since Israel’s Antitrust regulator on December 23 said he intends to disband exploration partnerships as they create a cartel.