Stock News: Dubai Plunges 4.2% As Oil Hits New Low

Dubai’s bourse tumbled in early trade on Tuesday after the price of Brent crude oil hit a new five-year low of $65.33 per barrel, prompting fresh selling by panicky retail investors.

The main Dubai index dropped 4.2 per cent to 3,862 points, nearing major technical support at 3,731 points, its July low.

Emaar Properties, the emirate’s largest listed firm, tumbled 6.9 per cent to Dhs7.75, falling below its June low of Dhs7.95, a major technical support.

“Crude and technicals” dominate investors’ attention right now, said Sanyalak Manibhandu, manager of research at NBAD Securities in Abu Dhabi; Dubai is suffering because it is one of the most liquid markets in the region, he said.

“People wanted to take a bet in this region, they went to Dubai – now they’re panicking.”

Many analysts think that because Abu Dhabi, Saudi Arabia and other big Gulf oil exporters have huge fiscal reserves, they will continue spending heavily despite oil’s drop, so the regional economy will stay strong – and Dubai will continue prospering.

But oil’s slide has been so sudden that retail investors are rushing to take profits on Dubai’s big gains of the past 18 months.

The sell-off is again making stocks attractive from a valuation perspective, but investors are only likely to start accumulating early next year, Manibhandu said.

Other Gulf markets also fell on Tuesday morning, but not so sharply. Abu Dhabi was down 0.5 per cent, Kuwait lost 0.6 per cent and Oman’s index slipped 0.2 per cent.