Shares on the Dubai stock exchange fell by the largest amount in two months Wednesday, leading declines across the Gulf, as markets were affected by expectations that growth in world oil demand will be weaker next year than previously thought. The Dubai Financial Market dropped 4.1 per cent, while the Abu Dhabi Securities Exchange was down 1.2 per cent, as stocks in the banking and property sectors fell.
"The market had spiked in recent weeks and was overbought in some respects," said Chahir Hosni, the equities sales manager at EFG Hermes in Dubai. "The correction was triggered by weaker global markets and subdued oil prices." The International Energy Agency said yesterday that global oil demand may recover by only about 1.3 million barrels a day (bpd) next year, after falling by 2.3 million bpd this year. Global oil demand peaked in 2007 at 86.5 million bpd.
Shares in Emaar Properties, the UAE's largest property developer by market capitalisation, fell by almost 7 per cent, while Union Properties also fell, by 5.9 per cent. Aldar Properties, the largest developer in Abu Dhabi, saw its shares lose 3.4 per cent, and the share price of Sorouh Properties, its nearest rival, was down 3.2 per cent. In the banking sector, Emirates NBD, the largest UAE lender by assets, and Dubai Islamic Bank both lost 3.4 per cent. Abu Dhabi Commercial Bank's shares dropped 4.1 per cent and Abu Dhabi Islamic Bank lost 2.7 per cent.
Aymen el Saheb, the director of operations at Darahem Financial Brokerage, said: "It's not only retail investors that have sold. The big boys have also opted to cash out of major stocks on both markets." Elsewhere in the region, Kuwait's benchmark index fell 0.7 per cent while Qatari stocks lost 2 per cent. The Muscat and Bahrain benchmark indexes dropped half a per cent each. Saudi Arabia's Tadawul exchange lost 0.4 per cent.