Shares in Dubai declined to the lowest level in five months as the emirate’s largest stock traded without the right to its next dividend and Gulf markets retreated amid plunging oil prices.
The DFM General Index (DFMGI) fell 2.2 percent to 4,186.11 at the close. The gauge lost 19 percent since the most recent peak on Sept. 3, leaving it less than 50 points away from a bear market. The measure fell as much as 4 percent in intraday trading. Emaar Properties PJSC (EMAAR), the real-estate developer that accounts for about 20 percent of Dubai’s gauge, traded without the right to receive a 1.257 dirham dividend and was the biggest drag on the gauge by index points.
“The market is falling because Emaar is trading ex-dividend today, and since it has the highest weighting on the index, its dragging the gauge down,” Tariq Qaqish, the head of asset management at Dubai-based Al Mal Capital PSC, said by phone. “It’s going to be a short-lived correction.”
Dubai last entered a bear market in June as investor concern about ownership of the United Arab Emirates’ biggest builder, Arabtec Holding Co., triggered a selloff. A slump in oil prices as the U.S. pumps crude has also prompted investors to sell stocks across the oil-producing Gulf Cooperation Council.
Brent, the benchmark grade for more than half the world’s oil, dropped to $69.69 a barrel, the lowest level since May 2010. The 12-member Organization of Petroleum Exporting Countries refrained from cutting output to shore up prices at a meeting in Vienna last week, pushing Saudi Arabian stocks into a bear market yesterday.
Regional investors “are coping with selloffs in their own markets,” Qaqish said. “A lot of Saudis invest in the U.A.E., so they’re selling their positions here to focus on their home market.”
In Dubai, Emaar traded at 9.54 dirhams. Investors had to own the stock before today to receive the payout.
The main gauge’s 14-day relative strength index declined to 31.4, the lowest level in more than a month on a closing basis. A level below 30 indicates to some analysts that securities have fallen too far and are poised to rise. The index is trading at 13.3 times 12-month projected earnings, the lowest multiple in a year.-Bloomberg
