Dubai Stocks Enter Bear Market; Emaar, Dubai Islamic Decline

By Zainab Fattah

Aug. 12 (Bloomberg) -- Dubai stocks retreated, pushing the Dubai Financial Market General Index into a bear market, as investors speculated the emirate's real-estate boom may slow.

Emaar Properties PJSC, the largest real-estate developer in the Middle East and North Africa, fell to its lowest since April 2005. Dubai Islamic Bank, the biggest bank in the United Arab Emirates complying with Muslim Shariah law, declined for a seventh day.

Dubai's index has dropped for seven consecutive days, with losses accelerating after local media reported that regulators plan new laws aimed at curbing so-called ``property flipping'' and the central bank may tighten bank lending. The emirate joined Saudi Arabia and Oman as the third Gulf market tracked by Bloomberg to enter bear-market territory.

``Reports about new regulations to limit property speculation and tighten credit has scared off investors who fear the market may be in for a slowdown,'' Rami Sidani, head of Middle East and North Africa investments at Schroders Investment Management Ltd. in Dubai, said in a telephone interview. ``Low volume due to the absence of domestic money during the dormant summer period made the drop even worse.''

The Dubai Financial Market General Index lost 2 percent to 4,943.89 at the close, extending the drop since its 2008 high on Jan. 15 to more than 20 percent, the common definition of a bear market. About 173 million shares traded in Dubai's index, 32 percent less than the six-month daily average.

Real-Estate Boom

All of the 25 developing countries in the MSCI Emerging Markets Index except for Jordan and Morocco have experienced bear-market plunges since September as concern deepened that global economic growth will slow.

Dubai, the second-largest sheikhdom in the United Arab Emirates, became the first place in the Gulf to allow foreigners to own property in 2002, sparking a real-estate boom. Dubai's residential property prices in June jumped 41 percent from a year earlier, Al Mal Capital PSC said last month. Morgan Stanley on Aug. 5 said it expects Dubai real-estate prices to drop 10 percent between 2008 and 2010.

Dubai may approve regulations aimed at preventing property speculators from buying and selling real-estate before they are built, Al Arabiya television reported Aug. 9 on its Web site, citing the head of Dubai Real Estate Regulatory Authority, Marwan bin Ghalita. He was not available when contacted today on his mobile phone.

Bear Markets

The U.A.E.'s central bank is considering new regulations to tighten lending for personal loans and small business to rein in inflation, Gulf News reported Aug. 10, citing unidentified bankers. The central bank did not respond to a fax seeking comment on the article.

Emaar, the biggest member of Dubai's index, slid 3 percent to 9.6 dirhams. The stock has slumped 37 percent since Jan. 15. Dubai Islamic Bank lost 1.5 percent to 7.49 dirhams, extending the seven-day drop to 8.3 percent.

Saudi Arabia's Tadawul All Share Index has lost 30 percent from its 2008 high on Jan. 12. Oman's Muscat Securities Market 30 Index fell as much as 21 percent from its June peak.

The Abu Dhabi Securities Exchange General Index declined 1.8 percent. The Kuwait Stock Exchange Index decreased 0.8 percent, while the Bahrain All Share Index fell 0.6 percent.

Oman's Muscat Securities Market 30 Index rebounded, climbing 3.8 percent, after yesterday posting its biggest drop since Jan. 22. Qatar's Doha Securities Market Index added 0.1 percent. Saudi Arabia's Tadawul All Share Index gained 0.8 percent to 8,131.99 at 1:50 p.m. local time.

To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net.