No Rally In Dubai

Whether you believe the rally in European and American stock markets over the past two months is the last gasp of a bear market or the mewling of a nascent bull, at least there has been a rally. Over in Dubai and Abu Dhabi, where the financial crisis pulled the rug out from under a boom fueled by high oil prices and real-estate fever, the mood is still decidedly depressed.

Since March 11 of this year, the Abu Dhabi AFX index has gained 11.2%, or only slightly more than Dubai's benchmark DFM index, up 9.0%. This is weak tea when compared with the stock-market rebound in the West. The S&P 500 index in the U.S. has risen by 26.8%, while the Dow Jones Euro Stoxx 50 has advanced 34.2%.

"There's been a little bit of a bear market rally in Dubai, but certainly nothing compared to that of Western markets," said Christopher Davidson, an academic and author of several books on the United Arab Emirates. "This is not a correction in Dubai, but a bubble bursting."