The equity market in the UAE had been flying unnoticed off of our radar screen for the past few weeks. But then a couple of days ago we happened to stumble across the chart of the UAE benchmark equity index and we saw this rocket ride:
That ramp at the end represents a 33% gain in a month and a half. After seeing this we planned to feature UAE equities in one of our upcoming Major Market Move posts but we put it off for a few days. So of course then what happens but the market starts to correct to the tune of 8% in one week. The above chart now looks like this:
This article from the Gulf News pins the reason for the current decline on fears regarding the upcoming bond payment deadline for Greece.
The Dubai Financial Market (DFM) General Index slumped 4.82 per cent yesterday, the most in nearly two years, to 1,607.77 as local investors rushed to book profits from the recent bull-run rally ahead of a key deadline today for a Greek debt swap deal.
Seeing as how there were several episodes of Greek generated panic during that 33% run up (
such as this one on February 10th), we remain skeptical that Greece is now all of a sudden the cause for this recent sell off. When one looks over a longer time horizon, the current volatility looks relatively tame, especially when compared to the sell off that occurred back in 2008. This chart shows the UAE equity indexes against GDP growth (actual and future).
No comments:
Post a Comment