Dubai stocks may see dip

Dubai's stock market, lifted in the past two days by the upcoming initial public offer of developer Emaar Properties' malls unit, is nearing strong technical resistance that may encourage profit-taking.

The Dubai index rose 1.5 per cent to 5,141 points on Monday. It dropped sharply in June after hitting that month's peak of 5,192 points, and faces bigger resistance at May's multi-year peak of 5,407 points.

The June drop was largely due to builder Arabtec Holding, whose shares tumbled after Abu Dhabi state fund Aabar Investments slightly reduced its stake in the firm, a move which was followed by an abrupt resignation of Arabtec chief executive Hasan Ismaik.

The stock has since partly recovered but remains volatile as Ismaik is the largest shareholder with a 27.90 per cent stake in Arabtec. Ismaik said last week he was in talks with Aabar on selling part of his stake to the fund but wanted a price of over 5 dirhams, slightly above market value.

Emaar, Dubai's largest property developer, has now taken over as the main driver of the market's uptrend. The stock has surged 13.7 per cent to Dh11.65 in the last two sessions after the company said it would float its malls and retail unit in September, a move that will result in a fat special dividend.

Trading volume in the stock jumped to a four-year high on Monday, but it closed closed well off its intra-day peak of Dh12 after surpassing most target price estimates. Nine analysts surveyed by Reuters have a median target price for the stock of Dh11.30.

Abu Dhabi's bourse, which also dipped in June, has already surpassed its June highs and is approaching the May peak of 5,255 points.

Elsewhere in the region, Saudi Arabia's bourse looks likely to consolidate further after its central bank warned commercial banks that it may cap their retail exposure and would limit fees related to consumer lending.

On global markets, Asian shares dipped on Tuesday morning while Wall Street was closed for a public holiday on Monday and geopolitical concerns persisted.

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