Dubai’s stocks declined the most in a month as investors speculated Emaar Properties PJSC’s (EMAAR) rally this year was overdone and after crude oil dropped.
Emaar, the developer of the world’s tallest skyscraper, decreased the most in almost a week, trimming a rally in 2013 to 42 percent. Arabtec Holding Co. (ARTC) tumbled 10 percent, taking the loss to 27 percent in the three days after it announced a capital increase via rights shares. The benchmark DFM General Index (DFMGI) retreated 1.9 percent, the most since Feb. 3, to 1,899.10 at the close.
Emaar, which has the heaviest weighting on Dubai’s gauge, is the best-performing stock on the index this year, according to data compiled by Bloomberg. The company, whose 2012 profit jumped 18 percent, is benefiting from a property recovery in the emirate, whose economy grew at the fastest pace in five years in 2012, according to government estimates.
“Against a discouraging external backdrop, recent buyers sat on the sidelines and the stock took a long overdue breather,” said Julian Bruce, Dubai-based head of institutional trading at EFG-Hermes Holding SAE.
Emaar’s rally this year compares with a gain of 17 percent for the benchmark. The stock fell 2.6 percent today, the most since Feb. 26, to 5.34 dirhams after its 14-day relative strength index tumbled to 67 from 76. A reading above 70 indicates to some analysts that a security is poised to decline.
China Mortgage Rules
The MSCI Emerging Markets Index (MXEF) of developing nation stocks dropped 1 percent after China tightened mortgage rules to cool its residential property market. Crude oil for April delivery decreased as much as 0.7 percent to $90.09 a barrel. Gulf Arab oil exporters, including Qatar and the U.A.E., supply about a fifth of the world’s oil.
Arabtec, the U.A.E.’s biggest builder by market value, tumbled the most since January 2009 to 2.17 dirhams. The company said Feb. 27 it’s seeking to raise $1.74 billion to fund internal growth, acquisitions and joint ventures. The plan includes $450 million of convertible bonds, as well as a rights issue.
“Investors remain concerned over the dilutive impact of any new convertible bond,” Bruce said yesterday. “Greater detail of any issue, including conversion price, will be required to afford any degree of comfort.”
About 228 million shares traded in Dubai today, compared with a 12-month daily average of 171 million, according to data compiled by Bloomberg.
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