Dubai Financial Market suffers worst day since 2008

The DFM fell 7.4 per cent to 3,594.95. Reem Mohammed / The National

Billions of dirhams were wiped off the value of some of the UAE’s largest companies on Thursday after the country’s stock markets each suffered their worst day of trading in more than five years.

Investors’ fear over the falling price of oil intensified after Opec lowered its forecasts for world crude demand for the coming year, sparking a mass sell-off of shares by small and large investors.

The Dubai Financial Market benchmark was the world’s worst-performing, plumetting 7.4 per cent to 3,594.95. It was the bourse’s worst day of trading since October 2008, recalling the darkest days of the emirate’s real estate driven crash.

The Abu Dhabi Securities Exchange General Index fared only marginally better, shedding 4.7 per cent of its value in its sharpest one-day fall since November 2009, closing at 4,368.31.

“It’s a real disaster,” said Khaldoun Jaradat, a trading manager at Brokerage House Securities. “Everyone’s been talking about oil but that’s only part of the reason. People are afraid.”

Mr Jaradat said that several retail investors had been hit by margin calls, prompting them to sell more shares to cover costs. Much of the hot money that had flowed in since the country’s inclusion in the MSCI Emerging Market Index in June has now left the country.

While it was common for investors to sell shares in a falling market to buy them back at a lower price, the few investors who were re-buying were doing so at far smaller volumes, he said.

“The smaller retail investors have all been selling, but now we’re getting calls from our bigger clients who are looking to sell down as well.”

The past three weeks have erased the majority of the bourses’ gains during the past year, with both markets in serious danger of ending the year in the red after promising gains earlier in the year.

More than Dh35bn has been wiped off the value of Dubai shares this week.

Dubai’s headline index, which was up by 59.5 per cent on the year in early May, is now just 6.6 per cent higher than at the start of the year. The ADX General Index is now up just 1.2 per cent since the start of the year, having been up as much as 22.4 per cent in May.

It was another torrid day for Dubai Parks and Resorts, the government-owned theme parks developer, which had the misfortune to float on the exchange on Wednesday, when the market also experienced a sell off. The company’s shares fell by 7.7 per cent to close at 83 fils after their second day of trading, down 17 per cent since their debut.

Shares on the Nasdaq Dubai were also hit , with the ports operator DP World dropping 5.66 per cent.

All of the GCC’s headline share indexes finished in the red. Qatar Exchange finished down 4.3 per cent and Oman’s MSM 30 ended down 4.1 per cent. The Kuwait Stock Exchange Index was down 1.5 per cent. Bahrain’s BB All Share Index and Saudi Arabia’s Tadawul All Shares Index escaped relatively unscathed, ending down 0.9 per cent and 0.2 per cent, respectively.

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