Dubai:Dubai shares fell, leading stock market declines across the Middle East, as escalating violence in Iraq reignited a sell-off.
The DFM General Index plunged 4.7 per cent to 4,609.28, the lowest close since April 6. The measure has fallen more than nine per cent since it was included in MSCI's emerging-markets index at the start of the month. Emaar Properties, the company with the largest weighting on the gauge, tumbled 5.1 per cent yesterday. Qatar's QE Index dropped 1.6 per cent.
"Any regional unrest is bad news for the market, certainly if it's looking for an excuse to correct anyway," Julian Bruce, the head of institutional trading at EFG-Hermes UAE in Dubai, said by telephone.
The Islamic State in Iraq and the Levant, a breakaway al-Qaeda group, is advancing toward Baghdad after taking the northern city of Mosul. Iraqi military helicopters attacked positions held by militants north of Baghdad as the US moved an aircraft carrier into the Arabian Gulf for possible air strikes to support the government. Iraq's ISX General Index declined for a seventh day, tumbling 3.7 per cent.
The nation has been rebuilding its energy industry after decades of war and economic sanctions. An estimated 17 per cent of the country's crude reserves are in the north, according to the US Energy Information Administration. The price of WTI crude climbed 4.1 per cent last week to $106.91 a barrel on June 13, the biggest five-day jump since December.
"General perception is that higher oil prices are positive for the region," Bruce said. "But if you look at the charts of the Syria crisis you will see that any gain in oil prices was more than offset by geopolitical concerns so that the market traded down. So we had to expect something similar today."
Abu Dhabi's ADX General Index slumped two per cent, the Kuwait SE Price Index declined 1.4 per cent and Saudi Arabia's Tadawul All Share Index lost 1.4 per cent at 2:30pm in Riyadh. In Egypt, the EGX 30 Index fell 1.1 per cent as Ibrahim Mahlab, who was reappointed Prime Minister by newly elected President Abdel-Fattah El-Sisi, continued talks to form a new government.