On news the militant group Islamic State in Iraq and Syria (ISIS) has declared itself an official Islamic state and amid increased speculation of a bursting property bubble, shares of the iShares MSCI UAE Capped ETF (NasdaqGM: UAE) are down 4.4% Monday on volume that is already close to the daily average.
UAE’s glum Monday showing not only makes the newly minted ETF the day’s worst-performing non-leveraged fund, but extends a decline of nearly 26% since June 6, putting the $55.9 million ETF firmly in bear market territory. [Iraq Violence Plagues UAE ETF]
In Dubai, the benchmark DFM General Index tumbled 4.4%, sending stock there to the worst monthly performance since November 2008. “The index is now poised for its first loss in a quarter since June 2012, with none of the regularly traded stocks in the 30-member gauge trading above their 50-day moving average,” reports Laurence Dodds for The Telegraph.
Shares of construction firm Arabtec fell another 3.2%, underscoring fears of an overheating property market, the same catalyst that plagued UAE equities during the global financial crisis. Arabtec , which is UAE’s 17th-largest holding at a weight of 2.36%, has plunged 59% since touching a record high on May 14.
Although Arabtec is a small part of UAE, the stock’s weakness and increasing concern about the property market there, something the central bank recently cautioned about, has made the fund vulnerable due to a massive 67.7% weight to the financial services sector.
That includes eight financial services among the ETF’s top-10 holdings. Real estate firms Emaar Properties and Al Dar Properties are UAE’s largest and third-largest holdings, respectively, combining for almost 24% of the ETF’s weight, according to iShares data.
The iShares MSCI Qatar Capped ETF (NasdaqGM: QAT)is off 3.8% today. Dating back to early 2013, even before MSCI made the decision to promote Qatar and UAE to the emerging markets index, Qatari equities and Dubai-listed shares had been among the world’s best performers. Inflows to QAT and UAE have shown there is some appetite for these countries’ equities in the single-country ETF wrapper.
However, QAT is off almost 20% in the past month amid allegations of bribery and graft relating to the country winning host nation status for the 2022 World Cup. FIFA has yet to confirm that Qatar will lose the 2022 World Cup. [Qatar Foreign Ownership Limits Ready to Rise]
iShares MSCI UAE Capped ETF
