Middle East bourses drop to 4-month low on global crisis

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Investors watching the index closely at the Dubai Stock Exchange.

The Dubai stock market fell to the lowest level in more than four months on concerns over worsening debt crisis in Europe and a global economic slowdown that will dampen demand for Gulf oil.

Shares of Emaar, the developer of the world’s tallest skyscraper in Dubai, slumped the most in almost six months. Tamweel (TAMWEEL), a mortgage lender, fell to the lowest since 1 March. The benchmark DFM General Index (DFMGI) dropped 2% to 1,441.8 at the close in Dubai, the lowest level since 2 February.

Egypt’s EGX30 Index (EGX30) dropped 1.3% at the close in Cairo after unrest broke out in the Egyptian capital over a verdict in the trial of former President Hosni Mubarak.

Oil tumbled 17% last month, the most since December 2008, to $83.23 a barrel, amid concerns Greece may become the first country to exit the eurozone. US and European stocks fell for the fourth time in five weeks. The six-nation Gulf Cooperation Council, which includes the United Arab Emirates, Saudi Arabia, Qatar, Kuwait, Bahrain and Oman, sits on one-fifth of the world’s proven oil reserves.

“The decline in Dubai is ‘more related to oil’,” said Sebastien Henin, who helps oversee a $100 million fund at The National Investor in Abu Dhabi. “The second reason is the lack of visibility in the eurozone. Losing only 2% in this current international meltdown is very good.”

According to data compiled by Bloomberg, about 124 million shares were traded in Dubai, compared with 12-month daily average of about 139 million shares. Emaar tumbled 4.1%, the most since 15 December, to AED2.79 ($0.76). Tamweel lost 4.4% to AED1.1.

Egypt’s index dropped to 4,625.62, the lowest level since 10 April.

A Cairo court on Sunday handed life sentences to Mubarak and his interior minister Habib El-Adli for complicity in the deaths of revolutionaries during last year’s uprising. It also acquitted six assistants of El-Adli on charges related to the killings and Mubarak’s two sons of corruption charges. All decisions are subject to appeal. Thousands of demonstrators filled Cairo’s Tahrir Square within hours of the verdict to voice their discontent.

“Today’s market is definitely politically driven and the global scene is not helping make things better,” said Omar Darwish, equity sales trader at Cairo-based Commercial International Brokerage Co. “People are back in Tahrir demanding the fall of the regime as if nothing had happened over the past year and a half and this may result in the delay of the presidential election.”

Abu Dhabi’s ADX General Index also fell 0.6% while Kuwait’s measure dropped 1.2% and Qatar’s QE Index fell 1%. Oman’s MSM30 Index retreated 0.6%, while Bahrain’s index declined 0.1%. Saudi Arabia’s measure rose 1% after tumbling the most since August yesterday. The Bloomberg GCC 200 Index (BGCC200) gained 0.1%.

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