09/12/2014 13:22 AST
Dubai’s benchmark stock index plunged below 4,000 for the first time since July, tracking a decline in global equities as oil prolonged its slide.
The DFM General Index (DFMGI) tumbled 5.4 percent to 3,813.06 at 1:06 p.m. local time, poised for the lowest close since February and the longest losing streak since 2012. Abu Dhabi’s ADX General Index slumped 3.3 percent, Qatar’s QE Index lost 2.9 percent and Saudi Arabia’s Tadawul All Share Index fell 2.7 percent. Emerging-market stocks fell for a third day amid a sell-off in energy companies as oil dropped to a five-year low.
“Weaker oil has put a dark cloud on the GCC 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 in the market, foreign outflows have further stimulated this drop.”
The slump in crude prices has prompted investors to sell shares across the oil producing Gulf, with Saudi Arabia’s Tadawul falling into a bear market on Nov. 30 and Dubai entering one yesterday. Brent crude, the benchmark grade for more than half the world’s oil, dropped to $65.56 a barrel, 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.
Dubai Bear
Emaar Properties PJSC, the real-estate developer that accounts for almost 18 percent of Dubai’s gauge, decreased 7.7 percent to 7.68 dirhams, the lowest since March 13. Investors had to own Emaar’s shares before Dec. 1 to receive a 1.257 dirham (EMAAR) dividend, a total payout of 9 billion dirhams ($2.5 billion).
“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 21.3 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 2.3 percent and Bahrain’s BB All Share Index slipped 0.8 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 of what is remaining at the end of the year.”
Bloomberg
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