Dubai rises from 3-month low; DFM leads
Dubai, May 26, 2010
Dubai Financial Market led gainers on Dubai's index in early trading on Wednesday as buyers return following Tuesday's plunge to pick up stocks at lower valuations.
DFM climbed 3.2 per cent. Late Tuesday, the company said it had paid two-thirds of the agreed deal price to acquire Nasdaq OMX's one-third stake in Nasdaq Dubai.
The $121 million deal was first announced in December, with Nasdaq OMX receiving 80 million DFM shares, equivalent to 1 percent of DFM's share capital.
Deyaar climbed 4.5 per cent, Arabtec added 2.4 per cent and Emaar Properties rose 2.1 per cent. The index rose one per cent to 1,587 point to ease away from Tuesday's three-month low.
Middle East markets are seen bouncing back on Wednesday as a slight turnaround in oil prices and global equities draws buyers back to regional markets following sharp declines the day before.
Short-term traders will continue to dominate, however, so there is likely to also be selling pressure into any strength as investors chase a quick profit, with an uncertain international outlook deterring longer-term players from stepping in.
Walid Mourad, senior equity analyst at ING, said investors seem to be misunderstanding the likely impact of the euro zone debt crisis on the Middle East.
"Even if oil stays at the levels where we are today, oil would average $75, the break even price for major government budgets is at $55," he noted.
"We're still above that. Petrochemical names have been heavily punished," he added.
Saudi Arabia's index made its largest decline for 18 months and Oman and Egypt each slumped to 2010 lows as six of the eight regional benchmarks fell by more than 3 percent on Tuesday.-Reuters