Dubai Stocks Drop Most in Month on Woes Rally Overdone

13/04/2014 14:33 AST

Dubai’s benchmark stock index fell the most in a month, tracking a decline in global markets, on investor concern this year’s rally was overdone given prospects for earnings growth. Qatar’s gauge dropped.

The DFM General Index tumbled as much as 2.1 percent, the most since March 12 before retreating 1.1 percent to 4,787.65 at 1:35 p.m. in the emirate. Dubai Islamic Bank PJSC (DIB), the United Arab Emirates’ biggest shariah-compliant bank, declined for a third day. Emaar Properties PJSC (EMAAR) had its steepest drop in a week. Qatar’s QE Index declined 1.2 percent.

The Standard & Poor’s 500 Index and the Nasdaq Composite (CCMP) capped their worst week since 2012 on concern valuations had climbed too high as earnings season starts. Technology stocks led emerging market gauges to the biggest drops in three weeks after the U.S. threatened tougher sanctions against Russia. Dubai’s benchmark trades at a price to earnings ratio of 18.6 compared with 10.2 for the emerging markets index, according to data compiled by Bloomberg.

“Considering the decline of international equity markets especially the U.S. last week and the strong rally in the U.A.E. over the past two years, we do expect corrections,” Tariq Qaqish, a fund manager at Al Mal Capital PSC, said by e-mail. “Many of the positive catalysts are already priced in.”

Dubai Islamic Bank fell 2.2 percent to 6.36 dirhams. Emaar, which is planning an initial public offering of its malls unit, declined 1.9 percent to 10.3 dirhams.

Shuaa Capital (SHUAA) PSC, the investment bank owned by Dubai’s ruler, surged as much 5.3 percent after reporting its first profit in the first quarter since 2010, helped by lending and investment banking fees.

Marka Entry

Marka, a Dubai-based company which plans an entry into the country’s fashion and restaurant businesses, begins an initial public offering to raise 275 million dirhams today.

Benchmarks in both Abu Dhabi and Oman advanced 0.1 percent. Kuwait’s and Bahrain’s gauges both fell 0.1 percent. Saudi Arabia’s index dropped 0.9 percent.

Bloomberg