Dubai’s benchmark stock index headed for the biggest drop in more than a year on Sunday.
A concern about the U.S. reducing fiscal stimulus prompted a selloff in emerging markets. In addition, the slow for business summer months and the nearing religious month of Ramadan contribute to the negative sentiment. Majority of investors and traders is expected to remain on the sidelines until after the end of Ramadan.
Emaar Properties PJSC declined to the lowest in two months. The Dubai Financial Market, the Persian Gulf’s only publicly traded stock market, slumped 6.3 percent.
The DFM General Index retreated 2.7 percent, the most since March 2012 on a closing basis, to 2,295.85 before market closing in Dubai. Abu Dhabi’s ADX General Index lost 1.5 percent.
Emerging markets stocks last week tumbled 5.6 percent, the most in 13 months, as Federal Reserve Chairmen Ben S. Bernanke said June 19 that the U.S. may halt bond purchases by mid-2014.
China’s manufacturing is shrinking at a faster pace this month, adding to stresses in the economy and financial system after interbank borrowing costs surged.
Market sentiment is being negatively affected by what’s happening worldwide, especially in emerging-market countries. Chinese manufacturing data and news from the U.S. Federal Reserve means sentiment and institutional presence will both be weak in the coming few weeks at least.
In addition to the traditionally slow for business summer season in the UAE, the Holly Month of Ramadan will begin in approximately two weeks from now. Trading activities are expected to remain slow, as many of the retail traders would take a break for fasting and observing cultural traditions.
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