Gulf Shares Retreat on Global Recession Concern; Emaar Falls

By Haris Anwar

Oct. 26 (Bloomberg) -- Persian Gulf shares declined on concern a deepening global slowdown will turn into a recession, crimping profits at local real-state and financial companies.

Emaar Properties PJSC fell the most in more than a week. Saudi Telecom Co., the Arab world's largest phone company, dropped after reporting a decline in third-quarter profit. Gulf Finance House E.C., Bahrain's largest Islamic investment bank by market value, retreated as the lender said profit fell.

The Dubai Financial Market General Index lost 4.7 percent to 3,102.65, while the Abu Dhabi Securities Exchange General Index retreated 3.8 percent. In Saudi Arabia, the Tadawul All Share Index declined 1.7 percent. The Bahrain All Share Index dropped 3.7 percent, the most since Bloomberg started tracking the measure in July 2004.

``It's panic selling led by international funds which need liquidity to cover their losses,'' Bassam Ramahi, brokerage manager at Emirates Securities in Abu Dhabi, said in a telephone interview. ``Those local investors who are following them will be the losers in the long run because you can't buy such big names so cheaply.''

In the U.S. the Dow Jones Industrial Average lost 3.6 percent, while the Standard & Poor's 500 Index dropped 3.5 percent on concern the economic slump will hurt corporate earnings. More than $10 trillion has been erased from the market value of shares worldwide this month as earnings decrease. Reports on Oct. 24 showed the U.K. economy contracted for the first time since 1992 and growth in South Korea was the slowest in four years.

Emaar

The DFM Index has lost 25 percent this quarter. The measure trades at an average of 7.1 times estimated earnings that compares with a multiple of 11 for the Standard & Poor's 500 Index, data compiled by Bloomberg show.

Emaar, the Middle East's biggest publicly traded real- estate developer, dropped 6.3 percent to 5.62 dirhams. The shares trade at 4.8 times estimated earnings.

Saudi Telecom declined 1.3 percent to 58.75 riyals as the company said net income fell 4.1 percent, missing analysts' estimates, as expansion costs hurt earnings.

Gulf Finance plunged 9.6 percent, the most in almost three weeks, to $1.98 in Bahraini trading. The bank said third-quarter profit declined to $82 million.

February 2000

Oman's Muscat Securities Market 30 Index slumped 8.3 percent to 6,506.03, the lowest since August 2007. In Qatar the DSM 20 Index tumbled 8.9 percent, the most since February 2000. The Kuwait Stock Exchange Index dropped 3.5 percent, bringing the decline this month to 21 percent.

Oman Flour Mills Co. tumbled 9.4 percent to 2.73 rials after the owner of shipping terminals said profit fell to 753,000 rials ($1.96 million) from 1.6 million rials in the year-earlier period.

Kuwait's central bank will propose a bill to parliament to guarantee the deposits in the country's commercial banks, state- run KUNA news agency reported today.

Trading in Gulf Bank KSC, Kuwait's fourth-biggest lender by market value, was suspended after reports that the bank may suffer losses after some clients defaulted on derivatives contracts, sparking concern the financial crisis could hit local lenders. The Kuwait Banking Sector Index lost 3.9 percent.

To contact the reporter on this story: Haris Anwar in Dubai on Hanwar2@bloomberg.net