Dubai: The Dubai and Abu Dhabi stock markets recovered on Sunday amid an apparent return of confidence, closing up over 1% and almost 4%, respectively, after heavy losses over Dubai’s debt woes.
After a four-day break, Dubai’s DFM Index, which dropped 12.5% in two days of trading last week, closed at 1,853.13 points, 1.18% up from its closing on Tuesday, in a session of heavy fluctuations. Abu Dhabi Securities Exchange, which shed 11.6% of its capitalization last week, closed 3.89% up at 2,673.12 points.
But as Abu Dhabi stocks firmed up, Dubai stocks appeared volatile with the index fluctuating from a 2.4% rise in the morning to a drop of around 2% into the red before recovering ahead of the close.
“The market did not expect this quick a recovery in Dubai... This shows that many investors are now convinced the media campaign (about Dubai’s debts) was exaggerated,” said al-Fajr Securities financial analyst Humam al-Shamaa.
Fears of a Dubai default over its mountain of debt have grown since the government of the emirate asked on 25 November for a freeze of payments on the debt of its largest conglomerate, Dubai World— liable for $59 billion (around Rs2.73 trillion).
The announcement sent jitters throughout global markets in the following days, while the United Arab Emirates (UAE) and other Arab stock markets in the Gulf reacted negatively last week after returning from Muslim holidays. But Sunday’s trading appeared to indicate that UAE markets were stabilizing and investors returning.
The total value of DFM trading reached 836 million dirhams ($228 million), compared with a volume of only 37.5 million dirhams ($10.2 million) 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%, increased 3.5% in morning trade. But it later went into the red, dropping by nearly 3% at midday, before it finally closed 3.55% up.
“There are those who are trying to make a quick profit... We saw offers to sell after the surge in Dubai. This is to avoid losses,” Shamaa told AFP, explaining the fluctuation in Emaar’s share price. “The market is stronger and confidence is returning to it,” he said.
All Dubai’s indices for trading sectors were in the green at opening, except for banking which was down at least 1.4%. But by midday, banks dropped further by over 2.4%, while real estate went 2.7% into the red. Only banks stayed in the red at the close, at down 1.56%.
In Abu Dhabi, the indices rose in all sectors on Sunday.