DUBAI, June 3 (Xinhua) -- The Dubai Financial Market (DFM) plummeted two percent Sunday as disappointing global data dominated investors' sentiment.
On the first trading day in the month of June, the DFM General Index (DFMGI) closed 2.02 percent lower at Sunday, falling to 1, 441.80 points. It was the largest day-loss Dubai posted in three months. The day before, the Saudi Arabian market index TASI dived 4.22 percent, sending shockwaves throughout the region.
Among the top five losers at the DFM bourse were real estate bellwether Emaar Properties, developer of the world's tallest tower, the 828-meter high Burj Khalifa, which dived 4.12 percent to hit 2.79 Dirham (about 0.76 U.S. dollars) and Bahrain's Islamic bank Gulf Finance House, losing five percent to hit 0.554 Dirham ( 0.15 dollars). The DFM decline was broad, as four shares out of 27 traded advanced and 22 declined.
Dr. Nasser Saidi, Chief Economist and Head of External Relations of the Dubai banking free-zone DIFC, said in his weekly economic commentary that "Disappointing data across the board - U. S. jobs, growth concerns in China and India - added to the existing fears of a global slowdown and sent equity markets sliding."
On June 1, the United States jobs report disappointed global markets when it was revealed that in May the world's largest economy created 69,000 new jobs, far below the 150,000 estimated. "Crude oil prices are the lowest since October 2011 as worries about weaker global demand led prices tumbling down while gold price rose as investors flocked to safe-haven assets," Dr. Saidi added.
On the trading floor in Dubai, retail investors expressed their frustration. Some of them lost their faith in a rebound of the market. "At the moment you can only lose in the market. All the bad news comes from America," said Trader Ellie, an expat from Syria.
Asked about the reasons for sluggish trading, Ellie said "we lack of big buyers, market movers and shakers."
Mohamed, a young Emirati investor, said that "bad news from abroad does not stop and there is not much time left for the market to gain momentum before the summer. The holy month of Ramadan starts on July 20, and then only a few people will trade or even buy shares."
After a strong first quarter this year, when the DFMGI surged nearly 22 percent, growing debt concerns in Europe and diving oil prices trimmed the early year gains during May, bringing the market's year-to-date profit back to around six percent. Most international investors took money out of the market with trading volumes falling by a third compared to the first quarter of 2012.
"The UAE Central Bank's Annual Report for 2011 showed that there was a significant outflow of capital to 95 billion Dirham ( 25.9 billion dollars), the highest outflow since 2008, from 10 billion Dirham (2.72 billion dollars) in 2010 - this could be interpreted as debt repayments and/or an increase in investments abroad by UAE entities, including the sovereign wealth funds," according to Dr. Saidi.
Bullish voices became rare. Egyptian investment bank EFG Hermes is one of them, saying in its daily published Short Time Analysis that the market left already the phase of extreme bearishness. "We are still waiting for bulls to turn up at current levels targeting 1505 on the short term," the report said.
Ahmed, an Emirati trader, said he expects bargain hunters to enter the spot soon. "Stocks are cheap at this level. I like DFM, the Dubai market is the only listed bourse, and Arabtec shares."