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Sun 20 Feb 2011 12:37 PM

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Dubai shares drop most this month on growing Middle East unrest

Dubai's DFM  retreats 3.7%, the most since Jan 30, to 1,536.45 points

Dubai shares drop most this month on growing Middle East unrest
STOCK WATCH: Arabian Gulf shares slumped, sending Dubai’s benchmark stock index down the most this month, on concern political unrest in the region may spread (Getty Images)

Middle East shares slumped, sending Dubai’s benchmark stock index down the most this month, on concern political unrest in the region may spread.

Emaar Properties, builder of the world’s tallest skyscraper, dropped 4.7 percent. Dubai Islamic Bank, the UAE’ biggest Shariah-compliant lender, fell the most since November.

The DFM retreated 3.7 percent, the most since January 30, to 1,536.45 at the 2 pm close in Dubai.

Kuwait’s gauge tumbled 2.5 percent, led by Mobile Telecommunications Co. as the company’s board rejected all purchase offers for its 25 percent stake in Zain Saudi Arabia.

Arab governments are cracking down on pro-democracy activists as uprisings that toppled leaders in Tunisia and Egypt spread to Libya, Algeria, Yemen and Bahrain. Prince Talal Bin Abdul Aziz, a member of Saudi Arabia’s royal family, said on February 17 that the kingdom may see protests unless King Abdullah Bin Abdul Aziz introduces reforms, according to BBC Arabic TV.

“The spread of the geo-political tension into Bahrain is causing investors to be risk averse,” said Nabil Farhat, partner at Abu Dhabi-based Al Fajer Securities. “The risk of spreading is dependent on each country’s situation. If you have a country with high inflation, an autocratic regime, high unemployment and a big percentage of the population that is below the poverty level and young, then the risk is high.”

Bahrain’s authorities on Saturday backed down from a standoff with protesters in a bid to ease tensions.

In Yemen, gunfire broke out in the capital, leaving one man dead. Security forces in Libya have killed at least 84 people in three days of protests in several cities, Human Rights Watch said in a statement on its website on Saturday.

Bahrain’s credit default swaps climbed 17 basis points to 304, the highest since July 2009 on February 18, according to CMA prices in London.

The cost of protecting Saudi Arabian debt against default for five years soared 12 basis points to 138, also the highest in 19 months. The contracts pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.

Emaar dropped to AED3.02, the lowest since June 16. Dubai Islamic retreated 3.4 percent, the most since November 7, to AED2.25.

Mobile Telecommunications, Kuwait’s biggest phone operator known as Zain, slumped 7.3 percent, the most since June 9. Zain’s decision may thwart a bid by Emirates Telecommunications Corp, or Etisalat, to buy a 46 percent controlling stake in Zain. Zain’s chief operating officer, chief strategy & business development officer and an advisor to the chief operating officer resigned, the company said yesterday. Etisalat dropped 0.9 percent.

Qatar’s QE Index decreased 1.6 percent. Oman’s MSM30 Index fell 1.1 percent, Bahrain’s gauge dropped 0.2 percent and Abu Dhabi’s ADX General Index lost 1.9 percent. Saudi
Arabia’s Tadawul All Share Index declined 0.8 percent.

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