Dubai's market has plunged during a volatile session as builder Arabtec and several other stocks tumbled by their daily limits of 10 percent.
The Dubai index slid 4.38 percent to a three-month closing low of 3,943 points, bringing its losses from a multi-year peak hit in May to 27 percent - although it is still up 17 percent year-to-date.
However, Dubai's drop dampened the market in neighbouring Abu Dhabi, which slid by 2.1 percent at the close of trade Monday.
Shares in Arabtec, the Dubai contractor whose value has dropped by more than 50 percent in six weeks, closed at AED2.61.
Other stocks related to the construction industry followed suit, with Union Properties, Drake & Scull International also ended limit down, as did bourse operator Dubai Financial Market and lender Ajman Bank.
Bellwether stock Emaar Properties fell by 3.67 percent to AED8.41.
The collapse marks a continuation of Arabtec’s downward trend on the Dubai bourse. Shares in Arabtec dropped by 6.45 percent on Sunday, while the index slid by 2.35 percent.
Fund managers said the losses were not due to any negative economic news in the United Arab Emirates, where confidence remained strong.
Instead, the markets were vulnerable to profit-taking after posting huge gains since the end of 2012; management turmoil at Arabtec, one of Dubai's most heavily traded stocks, had added to the selling spree.
"Arabtec continues to drive the pressure," said Rami Sidani, head of investment at Schroders Middle East. "There is still a lot of uncertainty around the stock."
The sharp drops appear to have triggered margin calls for leveraged investors, forcing them to sell even more stocks.
"We believe that there is some degree of leverage on the market, and that is exacerbating the pressure," Sidani said.
The Arabtec share collapse followed a decision by major shareholder Aabar Investments to reduce its stake in Arabtec earlier this month, the resignation of the CEO and top shareholder Hasan Ismaik last week and news of wide scale job cuts.
Even though Arabtec has reassured investors it will continue expanding, it remains unclear who will become its new full-time chief executive following the resignation of Ismaik this month.