Dubai’s market dropped by the most in more than two months yesterday as investors booked profits ahead of a verdict on Dubai’s World Expo bid on November 27.
The Dubai Financial Market General Index fell 2.7 per cent yesterday, its steepest decline since August 27 when investors were spooked by an escalation of conflict in Syria.
Irfan Ellam, the head of Mena equity research at Emirates NBD, said a successful expo bid was “priced in” to the market.
“From an investor perspective, its wise to book some profit at this stage, given the strong performance of the market year to date,” he said.
“Dubai is the favoured candidate but nothing is guaranteed and the sensible strategy is to take some money off the table. Whilst an Expo 2020 win will bring benefits to Dubai, over the medium term investors should also focus on Dubai Vision 2020, which will have recurring benefits for the economy.”
Dubai has been one of the best performing markets so far this year, up by 73.9 per cent, buoyed by a robust pickup in the economy and healthy corporate earnings.
But focus has honed in on the emirate’s World Expo 2020 bid in recent weeks as the clock winds down to November 27, the date when the world fair’s supervisory body, the Bureau International des Expositions, announces the winning city to host the fair.
Dubai is widely regarded as the favourite, ahead of Sao Paulo (Brazil), Yekaterinburg (Russia) and Izmir (Turkey).
Officials say hosting the event will attract 25 million people over six months and create 277,000 jobs.
The DFM is expected to receive a further boost if the emirate’s bid is successful. Further upward momentum may lift Dubai stocks in the coming months ahead of May 31, when the UAE is officially upgraded to emerging market status by the index classifier MSCI.
Among the worst performers on the market yesterday was Commercial Bank of Dubai, which slumped 6.8 per cent and Gulf Navigation Holding, which declined 5.8 per cent.
Dubai Statistics Centre said last week that Dubai’s economy had expanded by 4.9 per cent in the first half of the year to reach Dh169 billion. That figure compares with a 4 per cent rise in the first half of 2012.
In Abu Dhabi yesterday, the benchmark Abu Dhabi Securities Exchange General Index fell 0.9 per cent, led by property companies, which dropped 4.6 per cent.
tarnold@thenational.ae
