Middle East markets: Dubai index falls

Dubai's index fell on Wednesday after MSCI delayed its decision on a possible index upgrade for the UAE and Qatar, as most regional markets ended flat. Dubai's benchmark fell 1.8 percent, its largest one-day decline since May 23, after index compiler MSCI said it would delay to December its decision on whether to upgrade Abu Dhabi, Dubai and Qatar to emerging market status. Bourses in Abu Dhabi and Qatar ended largely flat.
Foreign ownership limits in Qatar, capped at 25 percent, would stand in the way of an upgrade, MSCI said. "Given this was on the day of MSCI's expected announcement, I would say the (Dubai) market is pretty resilient," said Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading. "I don't think there were a lot of foreigners selling, it's mostly retailers."
Dubai Financial Market, the only listed bourse operator in the Gulf, tumbled 5.4 percent. Contractor Arabtec and Emaar Properties fell 3.7 and 2.8 percent respectively. "What's more important than the one-day reaction is where this decision leaves us - the biggest obstacle remains foreign ownership limits and that needs to be addressed by the authorities," said Hashem Montasser, managing partner at Frontlane Capital, a Dubai-based asset management firm.
"The rules need to be relaxed so we have a larger investible universe," Montasser adds. In Egypt, the index fell 1 percent as concern that stock prices had risen too far given an uncertain economic outlook outweighed Citadel Capital's announcement of takeover talks. "In the short term, the market is news and rumour-driven, and looking expensive given the uncertain growth outlook," said Omar Ascar, head of trading in Cairo Capital Securities.
Citadel, up 0.3 percent, said it was in possible buy-out talks with potential strategic partners. Saudi Arabia's index reversed early-session gains after impact of the Greek government's confidence vote in parliament waned, prompting some investors to switch focus to the US Federal Reserve.
The Fed is likely to acknowledge renewed weakness in the US economy and reiterate its commitment to keep interest rates low for an extended period. Global shares retreated on Wednesday. The Saudi index eased 0.2 percent, inching towards Monday's 12-week low. Local investors are looking at cues from global markets amid a lack of fundamental catalysts, and await second-quarter earnings season which commences in about three weeks. "We're going to start looking solely at home at how the numbers pan out," said a Riyadh-based fund-manager who asked not to be identified. Saudi Basic Industries Corp dropped 0.7 percent, Al-Rajhi Bank slipped 0.4 percent and Saudi Electricity Company shed 0.7 percent.