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Dubai bourse hits its lowest since Jan 2016

Dubai bourse hits its lowest since Jan 2016

The slump was led by losses in contractor Drake & Scull

Dubai stocks slumped on Monday to its lowest since January 2016, led by losses in contractor Drake & Scull, while Saudi stocks slipped after gains ahead of index compiler MSCI’s move to lift Riyadh to its emerging markets benchmark.

Drake & Scull shares fell 10 per cent to close at Dhs0.9 on retail selling after it fell below a key support level of Dhs1.

Concerns about Drake & Scull’s business outlook and ongoing investigations against its previous management are weighing on the stock, traders said. The stock is down over 60 per cent so far this year.

The Dubai index fell 2.1 per cent to close 2,868 points, a new low for the year and its lowest level since January 2016.

Air Arabia posted fresh losses as investors remained anxious about its exposure to embattled private equity firm Abraaj, which earlier this month had filed for provisional liquidation. The stock closed 1.5 per cent lower.

Among blue-chips, Emaar Properties fell 2.7 per cent and Dubai Islamic Bank dropped almost 2 per cent, giving up some of the recent gains on the back of its successful rights issue.

Saudi stocks ended 0.1 per cent lower as investors paused after a strong rally on the back of expectations that Riyadh will be added to the MSCI emerging market benchmarks. The Saudi index is up over 15 per cent this year, the best performing index in the Gulf region.

Charles-Henry Monchau, chief investment officer at Al Mal Capital in Dubai, said overall valuations for Saudi stocks are not very attractive after the recent gains and the market can lose momentum from here onwards.

“Investor focus would now shift back to fundamentals and the second quarter results coming in a couple of weeks, would be a good reality check of underlying trends,” he said.

Kuwait stocks were the only exception in the Gulf market where most stocks were up. The index rose 1.1 per cent, led by gains in telecommunications company Zain which rose 2.2 per cent and Kuwait Finance House which climbed 1.5 per cent.

Last week MSCI said it will include the MSCI Kuwait Index in its classification review next year for a potential move from frontier to emerging markets.

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