Madoff fallout sparks investor selling spree

Dubai: UAE investors went on a selling spree on Sunday as news of the world's largest sovereign fund's exposure to Bernard Madoff's Ponzi scheme came to light and rumours of corruption scandals hitting the real estate sector and sparking the setting up of accountability body in Abu Dhabi did the rounds in the markets.

"Why is it [the body] is being established now, such questions are being asked and people are speculating and this does not help at all," said head of equities, ING Investment Management, Middle East, Fadi Al Said.

Real estate stocks bore the brunt of the sell-off, though there were declines in financials, energy, telecom and transportation.

The New York Times reported that Abu Dhabi Investment Authority had an indirect exposure of about $400 million (Dh1.46 billion) with Madoff.

"It has all to do with the weak market sentiments," said Al Said. "ADIA had indirect exposure of about $400 million to Madoff, but their exposure to Citi has led to much more than $400 million loss in one day. Whenever sentiment is bad, you are ready to inflate that news more and more," Al Said said.

The DFM benchmark plunged 5.58 per cent to close at 1,802.77.

Real estate sector index lost 9.52 per cent and financials fell 7.90 per cent. Emaar Properties closed at Dh2.63, down 9.93 per cent and Deyaar Development fell 7.69 per cent to Dh0.60. Union Properties declined 8.65 to Dh0.95.

The Abu Dhabi Securities Exchange Index retreated 3.72 per cent, down 99.68 points, to 2,576.36. Sorouh Real Estate fell 9.51 per cent to Dh2.95, Aldar lost 7.10 per cent to Dh4.58. Abu Dhabi National Energy slid 8.652 per cent to Dh1.06.

Oil sliding from $40 to lows of prices in the $30-range over the weekend also played its part, with the Saudi Arabia's market shedding in excess of 4 per cent on Saturday.