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Middle East markets return to profit-taking

Dubai - Most major stock markets in the Middle East fell on Sunday as investors resumed profit-taking ahead of the Eid al-Adha holidays, against a backdrop of large share flotations and falling oil prices.

Dubai's bourse led the decline, sliding 1.3% with most stocks in the red. Leading real estate developer Emaar Properties fell 0.4% after rising as much as 2.6% earlier in the session.

The firm's subsidiary, Emaar Malls Group (EMG), closed subscriptions for its initial public offer last Friday and is due to announce the final offer price on Monday.

Sources familiar with the matter told Reuters last week that the offer's institutional tranche had been subscribed 7.5 times at the top end of the 2.50-2.90 dirham price range, while the retail tranche was subscribed 20 times.

That means the IPO, which is expected to raise $1.58bn, attracted as much as $17.8 billion in total, or a fifth of the market capitalisation of Dubai's main index. The prospectus does not set an exact date for the refund of surplus IPO funds but says it must be done no later than October 1.

The large, temporary outflow of funds is one of the reasons behind the market's weakness, said Shakeel Sarwar, head of asset management at Securities & Investment Co (SICO) in Bahrain.

Among other factors are strong year-to-date returns, which has left many stocks fully valued for now, as well as the upcoming Eid al-Adha holiday and declining oil prices. The price of Brent crude has fallen 16% from its June peak and moved below $100 per barrel this month for the first time in more than a year.

Saudi Arabia, in particular, could swing to a state budget deficit next year and start running down its huge foreign reserves if it does not rein in the growth of government spending, the International Monetary Fund said last week.

Most economists expected the Saudi economy to continue growing solidly, and the government could easily cope with a budget deficit by drawing on past surpluses or borrowing from the market. Nevertheless, the prospect seems to be dampening the mood of some investors.

"All of these factors collectively are causing investors to take profits," Sarwar said.

Shares in retail and restaurant start-up Marka, which jumped 59 percent when it listed last Thursday, fell 2.5% on Sunday.

Abu Dhabi's bourse fell 1.0% as most blue chips declined. National Bank of Abu DHabi fell 2.7%, Abu Dhabi Commercial Bank slid 1.9% and Aldar Properties dropped 3.0%.

Saudi, Qatar

Saudi Arabia's main index fell 0.8% in a sell-off that affected all sectors. Like Dubai, the market is being affected by a large IPO as National Commercial Bank, the kingdom's largest lender, prepares to float next month.

The stock exchange will close for the whole week starting on Sunday, October 5.

Qatar's benchmark edged down 0.3% as trading volumes were low and focused on property developer Ezdan Holding, which is not part of the index but will join it from October 1. The stock added 0.8 percent.

Egypt's bourse fell 1.0% as most stocks declined. Commercial International Bank was the main drag, sliding 0.9%.

Egypt's stock market and banks will close for three days starting on Sunday for the Eid al-Adha holiday and a national holiday, the bourse and central bank said on Sunday.

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