Dubai: Dubai index fell off the cliff on Thursday, posting the biggest drop in six years after investors resorted to panic selling triggered by sharp drop in crude oil prices.
The Dubai Financial Market General Index ended 7.42 per cent to end at 3,594.45, after falling to a low of 3,594.92, a level last seen in January 2014, making it the biggest loser in the GCC region.
“It’s a continuation of panic that was caused by significant drop in oil prices and it would continue to adversely affect investors appetite for the region growth story in the coming few years,” said Tariq Qaqish, head of asset management, Al Mal Capital.
Brent crude reversed early gains to trade below the sub-$64 per barrel, its lowest level since July 2009.
Oil’s collapse into a bear market has been exacerbated as OPEC’s three largest members offered the deepest discounts on exports to Asia in at least six years. The Organization of Petroleum Exporting Countries, which supplies about 40 per cent of the world’s crude, decided against reducing its output target even as the U.S. pumps at the fastest pace in more than three decades.
“The sell off has been enticed by the fact that market is driven by retail investors and margin lending. There has been margin call pressure in the last few sessions,” said Qaqish. A number of brokerages starting putting out margin calls on Thursday as losses accumulated.
Emaar Properties, the real estate developer with more than 18 per cent weightage in Dubai’s gauge, declined more than 9 per cent to end at Dh7.23. Arabtec ended more than 7.5 per cent lower.
Elsewhere, the Abu Dhabi Securities Market General Index ended 4.68 per cent lower at 4,368.31.
