Dubai shares slumped to the lowest in almost three months, led by property-related companies, after Arabtec fired hundreds of employees, according to three people familiar with the matter.
The DFM General Index fell 3.2 per cent to 4,348.28 at 11.45am. in the emirate, the lowest level since March 26 and a second day falling. Emaar Properties, the company with the largest weighting on the gauge, was the biggest decliner by index points, retreating 3.8 per cent. Arabtec tumbled 9.9 per cent after dismissing staff including senior managers, the people said, who asked not to be identified because the information is private.
“There is confusion in the market and I call it Arabtec fever,” Wadah Al Taha, chief investment officer of Dubai-based Al Zarooni Group, said by telephone. “The sentiment is very weak, and investors weren’t prepared for the situation getting so much worse.” In a worst case scenario the index could fall to 3,800, he said.
Dubai’s gauge plunged 14 per cent since the end of May, on course for the worst month since 2008, according to data compiled by Bloomberg. Shares soared this year amid a real estate recovery in the emirate before the UAE central bank said on June 8 there are signs the property market is overheating.
Two of the regularly traded stocks in the 30-member benchmark gauge are trading above their 50-day moving average price, according to data compiled by Bloomberg. That’s the lowest since July 2012 and compares with a one-year peak of 23 in December.
Arabtec, which has the fifth-highest weighting on Dubai’s index, has plunged 48 per cent this month. Abu Dhabi state-run Aabar Investments cut its stake to 18.85 per cent as of June 11 from 21.57 per cent, stoking speculation the builder was losing government backing. The company’s shares plunged to 3.46 dirhams, the lowest since March 17. Emaar, developer of the world’s tallest tower, fell to 8.90 dirhams.
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