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Tue 22 Jun 2010 10:11 PM

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Dubai shares retreat as MSCI keeps UAE as frontier market

Decision not to upgrade UAE and Qatar to emerging markets was 'reflected negatively'.

Dubai shares retreat as MSCI keeps UAE as frontier market
SHARES DECLINE: Dubai shares declined for the first time in four days, leading to a drop in the Gulf. (Getty Images)

Dubai shares declined for the first time in four days, leading a drop in the Gulf, as index provider MSCI kept the UAE and Qatar as frontier markets, citing the countries’ dual account structures.

The DFM General Index lost 1.4 percent, the most since June 6, to 1,542.07, led by Emaar Properties, builder of the world’s tallest skyscraper. Air Arabia retreated 1.6 percent. Dubai’s measure had gained 5.1 percent in the previous three days. Abu Dhabi’s gauge dropped 0.4 percent and the Bloomberg GCC 200 Index slid 1 percent.

The MSCI decision not to upgrade the UAE and Qatar to emerging markets “was reflected negatively as most foreign buying over the previous three days was in anticipation of the announcement,” said Mohammed Ali Yasin, chief executive officer at Shuaa Securities in Abu Dhabi.

The UAE and Qatar will remain under review for a potential reclassification to emerging markets, the index provider said.

In reference to the UAE, MSCI said: “The need to set up and operate with a dual account structure is still a major concern to a number of international institutional investors and is incompatible with general emerging markets standards.”

Qatar’s gauge fell 0.5 percent.

Global stocks retreated, with the MSCI World Index declining 0.4 percent as of 5:41 pm in Dubai and the MSCI Emerging Markets Index dropping 1.1 percent on renewed concern Europe’s debt crisis will hurt the global economy.

Fitch Ratings yesterday cut its credit rating on BNP Paribas SA, France’s largest bank and Standard & Poor’s Ratings Services said Spanish lenders face difficult years as credit losses mount.

Crude for July delivery dropped 0.1 percent to $77.77 a barrel in electronic trading on the New York Mercantile Exchange. The six nations of the Gulf Cooperation Council supply about a fifth of the world’s oil.

A total of 83.3 million shares traded on the Dubai exchange today, compared with the six month daily average of 199 million.

Emaar retreated 3 percent, the most since June 6, to 3.29 dirhams. Air Arabia, the UAE’s biggest low cost carrier, decreased to 86.5 fils.

Aabar Investments PJSC gained 2.4 percent to 1.68 dirhams, the highest in almost three weeks. Earlier the shares had tumbled as much as 5.5 percent.

The largest shareholder in Daimler AG said its board will meet on June 24 to consider calling a shareholders’ meeting to approve converting into a private joint stock company and canceling the listing of shares on the Abu Dhabi exchange. About 24.7 million shares traded, the most since January.

Saudi Arabia’s Tadawul All Share Index retreated 1.4 percent, the most in three weeks, to 6,363.55 and Oman’s MSM30 Index dropped 0.7 percent. Kuwait’s benchmark rose 0.4 percent and Bahrain’s gauge advanced 0.8 percent.

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