UAE share rally to come under pressure as May switch to emerging markets and IPOs could backfire « ArabianMoney

UAE share rally to come under pressure as May switch to emerging markets and IPOs could backfire « ArabianMoney:



"With the Dubai Financial Market up 25 per cent since the start of the year and the Abu Dhabi Securities Exchange by 16 per cent investors are nervous that the steep rally could come under pressure with the approach of the May deadline for the switch from frontier to emerging market status in the MSCI indices and new share issues. Ukraine could also prove a ‘black swan’ event for global financial markets.



No stock market can head upwards in a straight line forever and the DFM clocked an amazing 113 per cent increase in value last year. That was a rebound from a very low base. However, it also reflected a preference amongst global investors last year for frontier rather than emerging market stocks. 




Frontier exit



This May the three UAE bourses will be upgraded from frontier status to the MSCI emerging market index. Frontier funds will therefore have to sell their UAE stocks and emerging market funds load up on them. The transfer may not be smooth, especially as emerging markets have been relatively out of favour."



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