Continuing my discussion on the UAE markets, which saw their worst time in the past 4 years.
Dubai Financial Market is down 57% year till date and Abu Dhabi Securities Market is down 35% year till date in 2006. There is nothing wrong in the economy of the UAE or for that matter of Middle East. It’s a classic example of bursting of bubble after a stupendous rise which saw the UAE markets multiply manifold in the past few years.
China stock market was down during 2001-2004 period when its economy was booming, US stock market was down in 2000-2003 period with nothing wrong in their overall economy as such. Those markets were down because prior to their bearish run, they saw stupendous rise of their stock indices. The same applies for the UAE.
However, the going is not so encouraging to have a feeling that the support levels have been achieved. The investors are not very enthusiastic, as of now, and lot of pessimism is inherent in the market. For the past 10 trading sessions, the volumes in the local markets are not very inspiring and any healthy rise is followed by quick profit booking leading to fall in markets. Thus until and unless investors gain patience to have some profit unrealized in their portfolio the near term market indices seems to remain in the tight band of 460-490 for DFM. I find support levels for DFM and ADSM at 425 and 3250 respectively. In fact the support level for ADSM is very strong.
I prefer markets moving sideways to build some confidence among investors. For the time being any sharp rise would be accompanied by profit booking. Let us wait for some consolidation.
China stock market was down during 2001-2004 period when its economy was booming, US stock market was down in 2000-2003 period with nothing wrong in their overall economy as such. Those markets were down because prior to their bearish run, they saw stupendous rise of their stock indices. The same applies for the UAE.
However, the going is not so encouraging to have a feeling that the support levels have been achieved. The investors are not very enthusiastic, as of now, and lot of pessimism is inherent in the market. For the past 10 trading sessions, the volumes in the local markets are not very inspiring and any healthy rise is followed by quick profit booking leading to fall in markets. Thus until and unless investors gain patience to have some profit unrealized in their portfolio the near term market indices seems to remain in the tight band of 460-490 for DFM. I find support levels for DFM and ADSM at 425 and 3250 respectively. In fact the support level for ADSM is very strong.
I prefer markets moving sideways to build some confidence among investors. For the time being any sharp rise would be accompanied by profit booking. Let us wait for some consolidation.
posted by Vikas Maheshwari, CFA at 12:27 PM
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