Dubai’s bourse could face more selling pressure on Wednesday as some brokers ask retail investors to reduce margin levels and stock valuations appear stretched after a strong rally last year.
Dubai’s index, which more than doubled in 2013, has fallen for three days and lost 1.5 percent on Tuesday to end at 3,378 points as developer Emaar retreated after announcing a $237.5 million bond-to-stock conversion.
A Dubai close below 3,350 points would point to a further drop to the next technical support at 3,310, Shiv Prakash, senior technical analyst at NBAD Securities Research, wrote in a note.
“If trade bounces off 3,370, then look for a climb to around 3,450,” he says. “A close over 3,450 is required to restore bullishness.”
Abu Dhabi’s bourse, which also fell on Tuesday, could consolidate, Prakash says, with profit taking in select stocks.
Analysts say some investors are booking profits in the United Arab Emirates to shift to other Gulf markets such as Kuwait and Oman, which made more modest gains last year and now offer better valuations.
In Saudi Arabia, PetroRabigh may make further gains after jumping its 10 percent daily limit to 27.5 riyals on Tuesday. That surge followed a debut HSBC research note on PetroRabigh that gave the stock an overweight rating and a price target of 40 riyals.
In global markets, Asian shares rose on Wednesday on strong United States trade data, while Brent oil futures edged up towards $108 a barrel.
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