Dubai rally may not continue

Fund managers discuss whether Wednesday's jump was just a "dead cat bounce".

The bounce in Dubai's stock market may not continue on Thursday as investors are tempted to take more profits before Ramadan, which will start early next week, and as fund managers discuss whether Wednesday's jump was just a "dead cat bounce".

The Dubai benchmark surged 6.1 percent on Wednesday after tumbling 6.7 percent on Tuesday, when a plunge in the stock price of the emirate's largest contractor, Arabtec, triggered a chain reaction of margin calls.

Bargain-hunters came in on Wednesday after valuations fell to more reasonable levels, but analysts say the market, which is 21 percent down from its mid-May peak, has not yet shown a clear reversal of its pull-back.

Uncertainty also persists around Arabtec, whose chairman on Wednesday pledged that the company would continue expanding but provided no details on specific projects and did not say what would happen to the 28.85 percent stake owned by former chief executive Hasan Ismaik, who quit last week.

Other markets in the Gulf are likely to continue consolidating on relatively low volumes as heavy fighting in Iraq and the summer lull make significant gains unlikely.

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Dubai Financial Market
1.3
0.02 1.56 (%)
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