Dubai Index Drops as U.S. Fiscal Cliff Pressures Global Stocks

Dubai’s shares fell, leading declines in the Persian Gulf, after concern over U.S. budget cuts and a delay in the European Union’s bailout of Greece spurred drops in global shares.
Emirates Integrated Telecommunications Co (DU), the United Arab Emirates phone services company known as Du, and construction company Arabtec Holding Co. fell for a second time in three days. The benchmark DFM General Index (DFMGI) dropped 0.3 percent to 1,612.92 points at 12:31 p.m. in the emirate. The Bloomberg GCC 200 Index (BGCC200) of regional stocks lost 0.2 percent and Qatar’s QE Index decreased 0.3 percent.
The Stoxx 600 Index dropped 1.7 percent last week and the MSCI Emerging Markets Index (MXEF) lost 1.4 percent on concern the U.S. will slip back into recession if lawmakers fail to reach a budget compromise on the so-called fiscal cliff, which refers to about $607 billion of tax increases and federal spending cuts set to kick in automatically in January. Euro-area finance ministers may not make a decision on unlocking funds for Greece until late November, a European Union official said last week.
Share price declines in Dubai are “mostly due to the fears that global markets now face due to the fiscal cliff in the U.S. with their budget as well as fears of the Greek bailout being delayed,” Marwan Shurrab, vice-president at Gulfmena Investments Ltd. said by phone today. “What we are going to see is consolidation around these levels, until there is greater clarity on the views and direction from international markets and sentiment.”
Du retreated 1 percent to 3.79 dirhams. Arabtec, which fell 3.1 percent last week, lost 1.2 percent to 2.46 dirhams, set for the lowest close since Nov. 7. The biggest builder in the U.A.E. last week said it revived plans to increase capital and sell convertible bonds as it seeks financing for expansion amid a decline in quarterly profit.
Elsewhere in the Middle East, Abu Dhabi’s index slipped 0.3 percent and Kuwait’s gauge lost 0.2 percent. Oman’s MSM30 Index (MSM30) and Saudi Arabia’s Tadawul All Share Index (SASEIDX) were little changed.
Israel’s TA-25 Index (TA-25) dropped 1 percent. The yield on the nation’s 5.5 percent bonds maturing in January 2022 fell two basis points to 3.9 percent.

Source:Bloomberg: