Dubai’s benchmark stock index retreated the most in almost 11 months after Emaar Properties PJSC (EMAAR)’s quarterly profit missed estimates.
Emaar, developer of the world’s tallest tower, slumped 3.7 percent. Dubai Financial Market PJSC (DFM), the only publicly traded Gulf Cooperation Council stock market, tumbled the most since May. The DFM General Index (DFMGI) retreated 2.1 percent, the biggest decrease since March 7, to 1,848.28 at the close in the emirate. Saudi Arabia’s Tadawul All Share Index (SASEIDX) fell 0.3 percent.
Dubai’s stocks surged 16 percent in January, the fourth- biggest gain among 93 global indexes tracked by Bloomberg, as investors bet Emaar’s profit would improve amid a real estate recovery in the city. Quarterly net income at the company with the heaviest weighting on Dubai’s index dropped to 512 million dirhams ($139 million), missing the 538 million-dirham average estimate of five analysts compiled by Bloomberg.
“Recent gains were pricing in stellar fourth-quarter numbers and the reality was somewhat different so some profit- taking is evident,” according to Julian Bruce, Dubai-based head of institutional trading at EFG-Hermes Holding SAE. “Looking ahead, volumes are lighter amid this weakness, so I see this more of a much-needed consolidation rather than any sort of turnaround in recent positive sentiment.”
Emaar shares fell to 4.69 dirhams today in the biggest drop since June 3. The stock surged 46 percent last year amid a revival in real estate, retail and tourism, which helped Dubai’s economy expand 4.1 percent in the first half of 2012, putting the emirate on track to reach a 5 percent growth forecast, government data show. That would be the fastest pace of expansion since 2007.
Dubai’s 14-day relative strength index dropped to 71 from 86. A reading above 70 indicates to some analysts that a security or index is poised to decline. Dubai’s measure, the best performer in the six-nation GCC in 2012, trades at an estimated 2013 price-to-earnings ratio of 10.5 times, versus 11 times for the MSCI Emerging Markets Index. (MXEF)
About 275 million shares traded in the city today, compared with last month’s daily average of 363 million shares. Dubai Financial Market, which relies in part on trading volumes for revenue, slumped 3.9 percent, the most since May 16, to 1.23 dirhams.
Elsewhere in the GCC, the Bloomberg GCC 200 Index (BGCC200) of the biggest companies in the Gulf and Oman’s MSM30 Index (MSM30) dropped 0.3 percent. Kuwait’s gauge increased 0.5 percent. Qatar’s QE Index (DSM) and Abu Dhabi’s ADX General Index (ADSMI) were little changed, while Bahrain’s measure gained 0.1 percent.
Egypt’s EGX 30 Index (EGX30) rose 1.6 percent following a drop of 1.5 percent last week when clashes between demonstrators and police left more than 50 people dead. One person was killed as protesters and police clashed Feb. 1, according to the Health Ministry. That prompted the biggest government opposition bloc, the National Salvation Front, to call on supporters to hold more rallies and assert that it won’t join a national dialogue to end the political crisis.
“The market is growing accustomed to the violence and the fact that the death toll wasn’t high is enough as a positive signal for some investors,” said Hassan Kenawi, equities trader at Cairo-based HC Brokerage. “We expect more volatility ahead, though, as pressure builds in the coming weeks to change the government.”
Israel’s TA-25 Index (TA-25) gained 1.5 percent, the most in a month, at the close in Tel Aviv. The yield on the government’s benchmark 4.25 percent bonds maturing March 2023 was unchanged at 4.09 percent.
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