Analysts are turning cautious on Dubai's bourse, the best performing regional market year-to-date
Analysts are turning cautious on Dubai's bourse, the best performing regional market year-to-date, as the rally runs out of steam and interest in the market remains on few selected stocks.
Dubai's measure fell for a first session in five on Wednesday, trimming 2013 gains to 18.5 percent. Bellwether Emaar Properties remains 48.3 percent up year-to-date, driven mainly by foreign buying interest and Telecom operator Du has gained 33 percent, while many other stocks remain neglected.
"There is a clear divergence in performance in the market lately with Emaar and Du being the two stocks that remain in strong rally mode," Adel Merheb, managing partner at investment advisory Tradeyourmarket.com. "Despite their combined weight in the index, they have not been able to push the market to new highs."
Merheb suggested that Dubai's rally is almost entirely driven by foreign investors and a change in global sentiment would drastically affect the market. "When these foreign inflows turn to outflows, it could get nasty fairly quickly," he adds.
Technical indicators on Dubai's index also point to weak signals. The market is in an overbought zone according a the relative strength index with negative divergence against the upward trend is a sign of caution.
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