Dubai stocks limp to end of worst year since financial crisis

Parvez Jabri December 31, 2018

DUBAI: Dubai’s stock market ended 2018 on Monday with a 25-percent annual loss, the worst year since the global financial crisis a decade ago, as the real estate and tourism sectors struggled.

The plunge in the Dubai Financial Market Index was the biggest among Gulf and Arab bourses amid signs of a slowdown in the emirate’s highly diversified economy.

But it was not as bad as in 2008 when the Dubai stock market dived 72 percent after the financial crisis triggered a debt problem for the emirate.

In 2018 Oman’s small bourse dropped 15 percent while stock markets in other energy-rich Arab Gulf monarchies ended the year in positive territory, buoyed by an increase in oil prices.

The Qatar Stock Exchange led the gainers with a 21-percent rise despite an 18-month-old economic and political blockade by its neighbours led by Saudi Arabia.

The Saudi stock market, the largest in the Arab world, ended the year up 8.3 percent despite dipping to a three-year low in October after Saudi journalist Jamal Khashoggi was murdered in the kingdom’s Istanbul consulate.

In December, the Dubai Financial Market Index dropped to a five-year low before slightly recovering to close the year at 2,529.75 points.

The stock market’s dive was attributed to a sharp drop in real estate sales and prices due to oversupply and weak demand.

The property market, which makes up around 13 percent of Dubai’s gross domestic product, has been in decline since 2014 but its slide accelerated in 2018.

In the third quarter alone, the price of houses dropped 7.4 percent in Dubai, according to the UAE central bank, after declining by more than six percent in the first half of 2018.

Shares in Emaar Properties, the largest developer in the Middle East, lost almost half their value over the past year, mirorring sharp falls for the sector as a whole.

Economic growth in Dubai, which is not directly dependent on oil, is expected to have slowed to 2.3 percent in 2018, from 2.8 percent the previous year, according to the central bank.

A glut of housing units and weak demand are also key reasons for the property market downturn, the Standard and Poor’s ratings agency said earlier this year.

Copyright AFP (Agence France-Press), 2018

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