Dubai stocks slid into bear-market territory as the crisis in the Middle East caused chaos in the energy, shipping, real estate and tourism industries.
The Dubai Financial Market General Index fell as much as 3.2% on Monday, down 21% from its February high. If the gauge closes at this level, stocks will be in a bear market, which is defined as a decline of 20% or more from a peak.
The recent selloff was sparked by the US-Israel strikes against Iran, which has responded with attacks on Gulf cities. Travel in the region has been disrupted and threats to shipping have escalated, driving oil prices higher. As the war enters its third week, the war threatens Dubai’s carefully cultivated image of a safe haven in an often volatile region.
Emaar Properties PJSC and Emaar Development PJSC have been the biggest decliners since the conflict started at the end of February, falling 34% and 35% respectively. Before the outbreak of hostilities, Dubai stocks had notched a 300% rally over nearly six years, powered by growing consumption, tourism, a property boom and financial services.
“This was expected and it’s a broad-based decline as seen from all the sectoral indices, so it entirely reflects the geopolitical situation in the region,” said Junaid Ansari, head of research and strategy at Kamco Investment Co. “There will be significant opportunities for bottom-fishing when things stabilize.”
Emirates on Monday resumed limited services at Dubai’s main international airport after a drone incident caused a suspension of flights hours earlier, the latest incident to set back the aviation hub’s efforts to normalize operations. Two drones also fell in the vicinity of the airport on Wednesday, resulting in injuries to four people.
All the attacks, along with missile and drone interceptions happening across Dubai, have resulted in frequent delays and lengthened flight times as aircraft circle the skies outside Dubai International Airport on a daily basis.
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