Dubai bourse approaches critical hurdle

The Dubai bourse is approaching a critical hurdle, but should have the momentum to overcome this and continue its resurgence, analysts say. After a storming week when it gained 2.6 per cent, the Dubai Financial Market General Index will open today at 5,824 points and is within striking distance of the 5,850 milestone.

The index broke this on Thursday, but couldn't hold above it and so investors will be hoping renewed foreign interest can help it to conclusively breach this mark this week.

"There's not a great deal of news around, but current valuations make Dubai a better option than most other regional markets," said Julian Bruce, EFG-Hermes director of institutional equity sales.

"A lot of investors that play the Saudi market are switching their cash over to the UAE, while high net worth players have returned to the market and volumes are picking up."

If 5,850 is overcome, Dubai only needs to add another 2.5 per cent to hit the 6,000-barrier, which could happen in the next 10 days, providing sentiment remains positive. For Abu Dhabi, the picture is less clear. The capital's bourse put in a decent performance last week, adding 2.1 per cent and it will open today at a 52-week high of 5,145 points.

"The continuation of the capital's upward trend depends on news, plus any developments with the foreign ownership mechanisms of certain stocks, particularly Sorouh and Aldar," said Bruce.

"The small cap stocks will perform well, but this will not drive the index significantly."

For both markets, then, the outlook is positive and the recent surge in trading may yet push back the imminent summer slowdown that typically takes hold in July and August.

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