The tumble extends Sunday's losses during which billions in shareholder value were wiped off the boards.
Global turmoil hits Gulf markets
Dubai was struck by stockmarket tremors yesterday, following global stocks on a downwards spiral. As the New York Stock Exchange fell by more than three per cent in early trading and European stocks slipped, Dubai and other GCC markets plunged into the red. The financial sectors of Western markets were hit by concerns over the US investment bank Lehman Brothers's third quarter losses and its apparent failure to find a capital provider, after potential suitor Korea Development Bank said it was no longer interested. Stockmarkets slumped in the GCC, just days after billions of dirhams were wiped out on Sunday. The plunge in market values was seen across the region, with a fresh allegation of corruption and concerns that banks and credit markets were tightening lending. The combination helped extend a miserable finish to a bleak summer. Dubai Financial Market (DFM) fell by 2.58 per cent, taking its annual loss to 26.4 per cent; Abu Dubai Securities Exchange (ADX) fell by 2.23 per cent, leaving its annual loss in double figures at 10.16 per cent. Last Sunday, the DFM fell by 4.6 per cent, wiping out Dh13.68bn (US$3.7bn) of shareholders' money, while the ADX plummeted by 3.7 per cent, shrinking its market capitalisation by Dh15.68bn. Dubai suffered most because of the latest alleged corruption investigation to hit the beleaguered housing sector - the housing mortgage firm Tamweel has confirmed Abdullah Nasser Abdullah, its deputy group chief executive, was arrested. He is the third Tamweel executive or former executive to be detained since April. Analysts and brokers attributed the Dubai fall to Tamweel's subsequent plunge yesterday, which saw it lose 4 per cent of its value. Tamweel said the investigation into its deputy group chief executive would not impact on the company's financial performance or its operations. It said the company's activities would continue as planned, adding that the company's board had approved new measures to ensure corporate governance. Zeeshan Saleem, the trading manager at MashreqBank, said, "It is the lack of liquidity in the whole GCC which is the problem." He added that the falls could be a result of Ramadan. Last year, the DFM reached its low midway through Ramadan - after which it went to a bull run. "This time we may have the same scenario. But this time last year foreigners were looking to enter the region," he said. However, the dollar is strengthening and foreigners are unwinding their positions across the GCC, often because of margin calls, which means the market needs a catalyst to pick up interest in stocks. The investment bank Shuaa Capital fell 9.3 per cent on the DFM yesterday, its lowest for nearly a year, because of fears that declining equities and fewer initial public offerings will hit profits. Last month, Shuaa said its first quarter profit fell 10 per cent because of increased staffing costs and reduced investment income. DP World, the world's fourth-biggest port operator, had its daily stock movement limit raised to 15 per cent from 10 per cent yesterday by the Dubai International Financial Exchange due to "market situations". Shares fell by 9.6 per cent to close at $0.66, its lowest ever. It has been a rollercoaster week for Saudi Arabia's Tadawul. After falling 5.4 per cent on Saturday and then 1.7 per cent on Sunday, it cut those losses by climbing 4.3 per cent on Monday, riding on the global equity rise prompted by the Fannie Mae and Freddie Mac rescue. Saudi faces a new rule change on Saturday which will limit certain stocks' price increase increments, in order to bring greater stabilisation to the market. Some investors are reported to be selling stock and pocketing the profit before then. firstname.lastname@example.org