Dubai stock market could record its worst year since 2008 – report

Dubai’s stock market index is on track for its worst year since the 2008 debt crisis, according to reports.

Bloomberg said Dubai Financial Market (DFM) has lost 19 per cent so far this year, mostly linked to poor performance by developer stocks hit by the emirate’s real estate market slump.

Read: Dubai property transactions down more than 20% in first nine months of 2018

The news service reported that stocks were trading near their lowest level since early 2016 on a price-to-book basis after more recently being hit by the global emerging markets sell-off and concerns in neighbouring Saudi Arabia over the geopolitical impact of journalist Jamal Khashoggi’s disappearance.

Read: US official Pompeo meets Saudi king over Khashoggi case

They are also down 50 per cent from a historical peak in 2014 when the DFM was added to MSCI’s emerging markets index.

“Traditional growth engines of the Dubai economy such as real estate, trade, transport and hospitality, have remained weak this year,” M.R. Raghu, the head of research at Kuwait Financial Centre, was quoted as saying.

Last month, S&P lowered its credit ratings for Dubai government-linked companies Dubai Electricity and Water Authority and DIFC Investments due to concerns over conditions in the emirate.

Read: S&P lowers ratings of Dubai firms due to slowdown concerns

S&P cited factors including population growth that has outpaced economic expansion and income levels for the cuts.

September data from Dubai bank Emirates NBD’s purchasing managers’ index also showed falling employment and the slowest growth since April.

Read: Employment levels drop in Dubai’s private sector, travel and tourism most hit

Infrastructure projects linked to Expo 2020 Dubai are expected to provide a boost to the economy into next year.

While, one investor, RWC Partners co-head of emerging and frontier markets James Johnstone, told Bloomberg current stock valuations “look very attractive” in property and banking.

“I would expect to see the market recover sharply in 2019,” he said.