Monday 14 March 2011

Business : What’s in store for the DFM?

It is ironic that the DFMindex lost more than 15 per cent in post-Libya panic selling even though the UAE is a bastion of political stability that has not witnessed the social unrest that has swept the Arab world from Morocco to Oman.

While some UAE listed banks, property developers, insurers and telecoms have exposure to Egypt or the Maghreb economies, there is no justification for the liquidation trade that has gutted valuations on the DFMand the ADSM.

The DFMwas in a savage bear market even before the overthrow of the Tunisian and Egyptian regimes. Dubai’s property crash and banking/external debt restructuring had accelerated a sell-off in the DFM, with a two-third plunge in trading volumes, the closure of dozens of stock brokerages and bank margin calls that forced investors to sell shares in a desperate scramble to raise cash. I truly believe that, below 1,400, we just witnessed a capitulation trade in the DFM, Lord Rothschild blood on the street inflection point. Why?

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