UAE markets recover but Dubai remains volatile

DUBAI: Abu Dhabi and Dubai stocks surged on Sunday on what dealers said was profit-taking, amid an apparent return of confidence following heavy losses last week over Dubai's debt woes.

The stock markets of Abu Dhabi and Dubai closed up 3.89 percent and 1.18 percent respectively, after a four-day break preceded by heavy losses over Dubai debt woes.

Dubai's DFM Index closed at 1,853.13 points, 21.65 points or 1.18 percent up from its closing on Tuesday, after heavy fluctuations during the day.

Abu Dhabi Securities Exchange was meanwhile up 4.01 percent minutes before it closed 3.89 percent, or 100.10 points, up at 2,673.12 points.

"It is surprising that the Dubai market has surged. The market did not expect this quick recovery in Dubai... This shows that many investors are now convinced that the media campaign (about Dubai's debt problems) was exaggerated," said financial analyst at al-Fajr Securities Humam al-Shamaa.

Fears of a Dubai default over its mountain of debt have grown since the government of the emirate asked on November 25 for a freeze of payments on the debt of its largest conglomerate Dubai World -- liable for 59 billion dollars.

The announcement sent jitters throughout the global markets in the following days, while the UAE and other Gulf stock markets reacted negatively last week after returning from the Muslim Eid holiday.

But Sunday's trading appeared to indicate that UAE markets were stabilising and that investors were returning.

The value of DFM tradings reached over 560 million dirhams (152.6 million dollars) around midday, compared to a total of 37.5 million dirhams (10.2 million dollars) on Monday.

The shares of Dubai's giant property developer, Emaar, which led the losers last week dropping by almost the maximum-allowed percentage of 10 percent, increased 3.5 percent in morning trade.

But it later went into red, dropping by nearly three percent at midday.

"There are those who are trying to make quick profit... We saw offers to sell after the surge in Dubai. This is to avoid losses... Emaar's shares are down now because of profit-taking sales," Shamaa told French news agency.

"The market is stronger and confidence is returning to it," he said.

"Abu Dhabi has passed the difficult stage... Dubai may still face a state of uncertainty," Shamaa said.

"It seems that foreign investors, who were the main reason for the drop in Abu Dhabi, have withdrawn their offers to sell," he added.