Dubai: The Dubai stock index plunged yesterday to hit more than a two-month low on feverish selling by investors on the back of sharp fall in overseas markets.

Abu Dhabi stocks shared a similar fate, with most of them retreating.

Real estate, construction and financial and investment services companies witnessed major declines.

After Friday’s sell off in global markets, which the S&P 500 stock index declining 2 per cent, it was expected that the concerns surrounding emerging markets on Federal Reserve’s withdrawal of quantitative easing would have a spillover effect in local bourses when they opened yesterday. Add to it that both markets experienced a solid uptrend since the start of the year and was expected to face resistance on purely technical grounds.

The DFM General Index gained 5.81 per cent last week and Abu Dhabi General Index was up 2.96 per cent. Year to date, the two are up a strong 12.06 per cent and 6.83 respectively.

“After last week the indices were already in a zone of potential resistance, and in each case a potentially significant area—this after significant moves over the past 10 weeks, and two years as well,” said Bruce Powers, a financial consultant and trader based in Dubai. “That combined with the clear bearishness now spreading throughout global markets, especially emerging markets, of which the UAE and GCC are included, I think was the trigger for more aggressive profit taking.”

Yesterday, DFM General Index lost 2.23 per cent to close at 3733.70 amid high volume and turnover trading. Turnover reached Dh2.20 billion on 1.11 billion shares traded. Of the 32 stocks traded, 27 declined, four advanced and one remained flat.

The Abu Dhabi benchmark index closed 1.83 per cent lower to 4569.93. A total of 478.22 million shares were traded, which were valued at Dh1.19 billion.

And respite from the global concerns on emerging markets is not likely to dissipate soon that may likely affect markets here, according to an analyst. “The drop was expected given US and EM [emerging markets] falls on Friday,” said Saleem Khokhar, head of equities at National Bank of Abu Dhabi’s asset management group. “Global markets impacted by mixed earnings releases and weak China ‎PMI. UAE fundamentals remain sound but weakness may persist until global markets stabilise.”

Among the high turnover stocks that witnessed substantial drops included Union Properties, Deyaar Development, Emaar Properties, Emirates NBD, Gulf Financial House in Dubai and Rak Properties, Aldar, Dana Gas, Waha and National Bank of Abu Dhabi.