Reuters/Dubai

Investors monitor share prices at the Dubai Financial Market. Dubai’s index dropped 9.6% last year, making it the worst performing Gulf Arab benchmark

Turnover on the Dubai Financial Market fell 60% in 2010, slumping to a six-year low, the company said in its annual report yesterday.

The bourse’s traded value in 2010 was 69.7bn dirhams ($18.98bn), down from 173.5bn dirhams in 2009.

Last year’s turnover was the lowest since 2004 and was less than a quarter of the 2008 total.

The trading slump also hurt valuations, with Dubai’s index dropping 9.6% in 2010, the worst performing Gulf Arab benchmark. Qatar’s index was the top performer in 2010, rising 24.8% followed by Saudi Arabia which gained 8.2%.

Dubai share prices have slumped in the wake of the financial crisis and the emirate’s debt crisis, with the index down 74% from a January 2008 peak.

The real estate and construction sector continues to dominate bourse trading, accounting for 67% of turnover in 2010. Property prices in the emirate have fallen nearly 60% from 2008 and face a further 11% decline as oversupply delays any hopes of a recovery, an October Reuters poll found. Slumping turnover on the Dubai bourse and Abu Dhabi Securities Exchange has forced many brokers to close, while the Dubai and Abu Dhabi governments have been in talks over a bourse merger.

Individual investors accounted for about three-quarters of Dubai’s traded value last year and institutions made up the remainder.

Dubai’s index retreated for a third straight session on yesterday, weighed down by builder Arabtec which fell after the regulator imposed a six-month trading ban on its chief executive.

The index closed 0.7% lower.

Arabtec dropped 2.5%, and the company’s chief executive Riad Kamal said his suspension from trading in UAE markets was due to his oversight in selling shares prior to the announcement of projects. “Obviously we will see some short-term impact, as there is no transparency about the issue at this point,” said Robert McKinnon, ASAS Capital chief investment officer.

“We still don’t know if this will have any impact on Arabtec. I don’t think it’s a major issue as, in that case, there would have been a significant penalty.”