Dubai Shares Drop as Mideast Unrest Sparks Risk Aversion; Emaar, Zain Fall

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 PJSC, builder of the world’s tallest skyscraper, dropped 4.7 percent. Dubai Islamic Bank PJSC, the United Arab Emirates’ biggest Shariah-compliant lender, fell the most since November. The DFM General Index retreated 3.7 percent, the most since Jan. 30, to 1,536.45 at the 2 p.m. 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 Feb. 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.”