DUBAI: Dubai’s benchmark stock index fell the most in a month, tracking a decline in global markets last week, on investor concern that this year’s rally was overdone given prospects for earnings growth. Saudi Arabia’s gauge also dropped.
The DFM General Index tumbled 1.7 percent, the most since March 12, to close at 4,759.15 in the emirate. Dubai Islamic Bank PJSC, the United Arab Emirates’ biggest Shariah-compliant bank, declined for a third day. Emaar Properties PJSC, had its steepest drop in a month. Saudi Arabia’s Tadawul All Share Index fell 1 percent at 2:53 p.m. in Riyadh. Al Rajhi Bank plunged the most in 10 months as first-quarter profit trailed analysts’ estimates.
The Standard & Poor’s 500 Index and the Nasdaq Composite capped their worst week since 2012 on concern valuations had climbed too high as earnings season starts. Technology stocks led emerging market gauges to the biggest drops in three weeks after the U.S. threatened tougher sanctions against Russia over Ukraine. Dubai’s benchmark index trades at a price to estimated earnings ratio of 18.3 compared with 10.2 for the MSCI Emerging Markets Index, according to data compiled by Bloomberg.
“Considering the decline of international equity markets, especially the U.S., last week and the strong rally in the UAE over the past two years, we do expect corrections,” Tariq Qaqish, a fund manager at Al-Mal Capital PSC, said. “Many of the positive catalysts are already priced in.”
Dubai Islamic Bank fell 2.9 percent to 6.31 dirhams. Emaar, which is planning an initial public offering of its malls business, declined 2.9 percent to 10.2 dirhams.
Shuaa Capital PSC, the investment bank controlled by Dubai’s ruler, surged as much as 5.3 percent after making a profit in the first quarter following three years of losses in the period. Gains from lending and investment banking helped the increase in earnings. It later retreated to close 0.6 percent higher at 1.72 dirhams.
Dubai-based Marka, which plans an entry into the UAE’s fashion and restaurant businesses, begins an initial public offering to raise 275 million dirhams ($75 million) Sunday.
Al-Rajhi Bank fell 3 percent to 72.5 riyals. Saudi Arabia’s biggest publicly traded lender said first-quarter net income fell 17 percent to 1.7 billion riyals ($453 million) versus estimates of 2.08 billion riyals, according to data compiled by Bloomberg.
In Doha, Qatar National Bank SAQ, the country’s largest lender, dropped 1.7 percent, the most in a month. Petrochemicals maker Industries Qatar fell 1.5 percent, the largest decline in two weeks.
“The market had a good run the past couple of weeks so there is some profit-taking, especially given what is happening in the overall global markets,” Saugata Sarkar, head of research at Qatar National Bank Financial Services, said by phone from Doha Sunday. “Given that we have a MSCI upgrade happening, there is still some upside.”
Markets in Doha and the UAE will be added to the MSCI Emerging Markets Index in May from the frontier gauge.
Benchmarks in Abu Dhabi and Kuwait both lost 0.2 percent while Bahrain fell fell 0.1 percent. Oman advanced 0.2 percent. Qatar’s QE Index declined 1.4 percent.
Israel’s TA-25 Index declined 1 percent with 19 stocks falling. Strauss Group Ltd. shares fell 2 percent. The government may ease restrictions on food imports, Globes reported.
The yield on the government’s benchmark bonds due March 2023 fell two basis points, or 0.02 percentage point, to 3.15 percent.