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Sun 7 Aug 2011 10:05 AM

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Dubai shares drop most since Jan on US downgrade

Saudi index plunged to a five-month low on Saturday as US rating cut sparked global economy fears

Dubai shares drop most since Jan on US downgrade
Dubai stock market

Arabian Gulf shares tumbled, sending Dubai’s index down the most
since January, after Standard & Poor’s cut the US’s credit rating
for the first time.

Emaar Properties, developer of the world’s tallest tower, slumped 6.6
percent. Arabtec Holding Co, retreated the most since March after it
said second-quarter profit dropped 74 percent.

The DFM General Index lost 5.2 percent, the most since January 30, to
1,461.76 at 10:17 am in Dubai. The measure has plunged 14 percent from
this year’s high in April, entering a so-called correction. Saudi
Arabia’s Tadawul All Share Index retreated 5.5 percent on Saturday, the
most since March 1.

Aldar Properties slumped to the lowest intraday level on record after
Abu Dhabi’s biggest real-estate company reported a second-quarter
profit that missed analysts’ estimates.

The shares tumbled as much as 7.8 percent to AED1.18, the lowest
intraday level since April 2005, when the company’s shares started
trading. They were at AED1.21 as of 11:52 am in Abu Dhabi.

Aldar reported a second-quarter profit of AED127.3m ($34.7m) after a
loss of AED475.3m a year earlier. The mean estimate of five analysts was
for a profit of AED153m, according to data compiled by Bloomberg.

Regional markets are being “affected by the very negative
international lead from the U.S. and the Saudi performance yesterday,”
said Samer Darwiche, a financial analyst at Gulfmena Investments in
Dubai. “Correlation between the foreign markets and Middle East and
North African markets is high, especially with the lack of catalysts for
the region.”

S&P downgraded the US’s AAA credit rating on August 5 one level
to AA+, while keeping the outlook at “negative.” The rating may be cut
to AA within two years if spending reductions are lower than agreed to,
interest rates rise or “new fiscal pressures” result in higher general
government debt, the New York-based firm said.

US stocks and European stocks posted their biggest weekly loss since
November 2008. The S&P 500 plunged 7.2 percent and the Stoxx 600
Europe Index tumbled 9.9 percent.

The Islamic holy month of Ramadan, when Muslims fast from sunrise to
sunset and business activity slows, started last week. About 29 million
shares traded in Dubai so far on Sunday, compared with a 12-month daily
average of 123 million shares, according to data on Bloomberg.

Emaar fell the most since March 2 to AED2.84. Arabtec, the UAE’
biggest construction company by market value, tumbled 7 percent, the
most since March 15, to AED1.33.

Second-quarter profit dropped to AED28.97m ($7.9m) from AED111m a
year earlier. The mean estimate of six analysts was for a profit of
AED44m, according to data compiled by Bloomberg.

Oman’s MSM 30 Index decreased 0.8 percent and Abu Dhabi’s ADX General
Index lost 2.4 percent. The Bloomberg GCC 200 Index of the region’s
stocks declined 0.7 percent.