Dubai index at lowest level in 5 years

Property stocks witnessed a meltdown on the Dubai bourse led by heavyweights like Emaar, but banks were spared from the sell-off. This in turn triggered a near 2 per cent fall on the Dubai index to its lowest level in five years.

The Dubai Financial Market general index fell to a low of 2,572.52, the lowest since 2013, before closing 1.97 per cent lower from the previous day at 2,580.27. “Such a continuous weakness with markets — at a five-year low — along with the sharp correction in the index implies that margin calls are getting triggered on certain stocks,” said Nishit Lakhotia, head of research at Sico Bank.

“While in the near term it’s difficult to time the bottoming out, we are definitely (somewhere) near the bottom now.”

Traders have been struggling to lock in gains on the index, which has been struggling for the past five years by shedding 52 per cent. In fact, the index has seen only one rally — in 2013-14 — over the past 10 years.

The traded value has also halved, standing at 30 billion shares in the year-to-date and the least since 2013, compared to 60 billion shares in 2017. Traded shares witnessed a peak of 120 billion in 2014.

The real estate sector has had a key role in this meltdown, with the UAE Central Bank noting in its quarterly report that realty prices have been on the backfoot as a result of a softer job market that continues to weigh on housing demand.

Most of the weakness in the index could be attributed to Emaar, which hit a low of Dh4.22 and the lowest in two years. Emaar, which had been the most prized possession in trader portfolios, hit a downward spiral since giving out lower than expected dividends from the proceeds of a partial stake sale in Emaar Development.

Emaar Malls hit its lowest level since the listing in October 2014, falling as low as Dh1.70.