Dubai’s shares snapped a five-day rally, leading a drop among Persian Gulf markets, as optimism that the bailout of Spain’s banks will stem Europe’s financial crisis faded, cutting demand for riskier assets.
Emaar Properties PJSC (EMAAR), developer of the world’s tallest skyscraper in Dubai, fell 1 percent. Arabtec Holding (ARTC) PJSC, the United Arab Emirates’ largest construction company, dropped the most in more than a week. The benchmark DFM General Index (DFMGI) decreased 1 percent, the biggest retreat since June 3, to 1,468.82 at the 2 p.m. close in the emirate. The Bloomberg GCC 200 Index (BGCC200) and Saudi Arabia (SABIC)’s gauge declined 0.9 percent.
Spanish bond yields surged the most in four months yesterday in the first trading after the government sought a bailout of 100 billion euros ($125 billion) for its banks. European officials have struggled to control the debt crisis that began in Greece at the end of 2009. The MSCI Emerging Markets Index (MXEF) retreated as much as 1 percent, while the Standard & Poor’s 500 Index yesterday lost 1.3 percent in New York. Futures rose 0.4 percent today.
“Our markets are far more correlated to global markets on the downside, as nobody knows the repercussions from a real fallout in the event that the euro zone collapses,” said Haissam Arabi, chief executive officer of Gulfmena Investments in Dubai. “There is great uncertainty and many investors feel they are better off on the sidelines, especially as the summer months are here.”
Dubai, the second-largest of seven sheikhdoms that make up the U.A.E., relies on trade, tourism and property for growth. The Islamic holy month of Ramadan, when Muslims fast from sunrise to sunset and business slows, will start next month. About 77 million shares traded in Dubai today, compared with a six-month daily average of 202 million shares.
Emaar lost the most since June 4 to 2.85 dirhams, while Arabtec retreated 1.1 percent, also the most since June 4, to 2.84 dirhams. The stock has rallied 88 percent this year, while Dubai’s benchmark stock gauge rose 8.5 percent. Aabar Investments PJSC, the Abu Dhabi’s state-owned company, boosted its stake in Arabtec through affiliates to 21.57 percent, Dubai bourse data showed last month.
The market regulator in the U.A.E. will require shareholders to disclose purchases that may lead to holdings of 30 percent stakes, according to a statement on the Securities and Commodities Authority’s website.
Saudi Stocks Decline
Some investors “may have a negative reaction” as there is concern “certain investors may be forced to sell stocks where they do not wish to disclose their interests,” Julian Bruce, the Dubai-based director of institutional sales trading at EFG- Hermes Holding SAE, the biggest publicly traded Arab investment bank, said in an e-mailed note today.
In Saudi Arabia, Al Rajhi Bank (RJHI), the kingdom’s largest lender by market value, dropped 1.7 percent, while Saudi Basic Industries Corp., the world’s biggest petrochemical maker, lost 2.7 percent to 89.5 riyals, the lowest since October.
Elsewhere in the Persian Gulf, Kuwait’s measure fell 0.9 percent, Qatar’s QE Index (DSM) retreated 0.4 percent and Abu Dhabi’s ADX General Index (ADSMI) decreased 0.6 percent. Oman’s MSM30 Index (MSM30) dropped 0.5 percent, while Bahrain’s measure was little changed.
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