Dubai’s market suffered its largest one-day slump since the emirate’s November 2009 corporate debt crisis, as the threat of international military action against Syria prompts jittery retail investors to dump shares.
Dubai’s index tumbled seven per cent to close at 2,550 points, cutting its year-to-date gains to 57.7 per cent. Many analysts had said the market’s sharp rise earlier this year left it vulnerable to fierce bursts of profit-taking.
It is not clear, however, that the market is starting an extended downtrend; the local and Gulf economies are strong, and Dubai’s real estate sector has been recovering from a crash.
Dubai led losses across Middle East bourses and sharply underperformed emerging market losses globally – MSCI’s emerging market index was down 1.3 per cent.
“Politically, the region is a mess and concerns of war in Syria are high,” said Yassir Mckee, wealth manager at Qatar’s Al Rayan Financial Brokerage.
“But the extent of the drop doesn’t make sense and people are over-reacting because local fundamentals are strong and even if there is a war, I don’t see it significantly impacting Gulf countries.”