Dubai market retreats to two-year low

Markets Update: The Dubai index took its biggest one day in hit two years today as investors banked gains and retreated from risk to await the fallout of tomorrow's Greek debt swap deal.

The Dubai Financial Market saw the biggest drop in shares in two years today. Lee Hoagland/The National

The Dubai index took its biggest one day in hit two years today as investors banked gains and retreated from risk to await the fallout of tomorrow's Greek debt swap deal.

The Dubai Financial Market General Index sank 81.41 points to close down 4.82 per cent at 1,6077.77. The fall is the steepest since January 2010.

However analysts said the drop represents a healthy letting off of steam and not the markets going off the boil.

Sherif Zeneiny, head of equities at National Bank of Abu Dhabi, said investors were taking profits made from the rally of the DFMGI so far this year - the index is up 18.8 per cent since the start of January -, and today's fall was in line with drops last night in the Asian, US and European exchanges.

"The European markets were under pressure yesterday which is the catalyst for the UAE sell-off. Investors are taking money off the table because risk is off generally.

"We might see more selling pressures in the coming sessions but this is healthy. This is not panic mode. The bull market began with the break through of the 1500 mark and there has definitely been a shift in sentiment."

Volumes were back up to the US$200m and continuing to look healthy, Mr Zeneiny said.

Arabtec continued to weigh on the market following a huge sell-off of the stock yesterday after confirmation Aabar had bought a 5 per cent stake in it. Today Arabtec closed down 9.85 per cent.

The builder joined a club of companies which shed more than 9 per cent during the day, including Union Properties, down 9.87 per cent, and Tabreed, which fell 9.6 per cent.