Dubai rallies to three month high

Analysts say that rising volumes is a good indication that the general index will be able to rise to the next resistance level.

Gulf markets followed the US's lead as the Dow regained lost ground on Friday.

Gulf markets rose Sunday, led by the Dubai Financial Market General Index, which reached a three-month high. The move follows a global rally late last week, with the Dow Jones Industrial Average up 3.14 per cent to 8,083.38 and the Nasdaq Composite Index gaining 3.89 per cent to 1,652.54 on Friday, while the S&P 500 Index advanced to 856.56. "US markets notching their fifth weekly gain in a row show the resilience of markets currently and backs up thinking that a near-term bottom is [within reach]," Matthew Wakeman, a markets commentator at EFG Hermes, said in a research note. "A sustainable rally [in regional markets] can only happen if it is led or at the very least underpinned by strength in US financial stocks. They led us in and they will have to lead us out." The Dubai Financial Market rose 2.39 per cent to 1,656.25 yesterday, witnessing trading volumes of more than 800 million shares, nearly double volumes of the previous session. "Dubai witnessed a good bullish rally and stands exactly on the resistance levels of 1,655 points," said Shiv Prakash, a securities analyst at MAC Capital Advisors. "Markets are trading above the 14-day moving average and await a breakout to test the next higher levels." Analysts say that rising volumes are a good indication that the general index will be able to rise to the next resistance level, though the increase is not sustainable yet. The next resistance mark is 1,800. "We are still seeing billion-dollar days in Dubai, but we are not seeing that in a sustained manner, which isn't surprising because international liquidity needs to return in a meaningful way first," said Ali Khan, a managing director at Arqaam Capital, based in Dubai. The Abu Dhabi Securities Exchange index rose 2.16 per cent to 2,597.95, driven by gains in property and financial services stocks. "Standout performers in Abu Dhabi were large-cap real estate stocks Aldar and Sorouh, Dana Gas and Union National Bank," said Mr Wakeman. Gulf shares rose across the board, although analysts said regional exchanges were doing more than mimicking gains in international markets. Nasser al Sheikh, the head of the Dubai Department of Finance, said last week the worst of the crisis was over and that Dubai companies had started receiving financial support from the US$10 billion (Dh36.73bn) raised through the Central Bank's bond issue. "Global market sentiment has helped, but we continue to experience real positive catalysts which we can point to; we're going from thinking about plans to actually deploying plans and this is being very well-received by local markets," said Mr Khan. Aside from reassurances from government officials, analysts say that investors are growing confident in measures introduced to support the economy, particularly small and medium-sized enterprises that comprise more than 80 per cent of the nation's businesses. "We do follow international markets, but now that we are well into the first-quarter results season and we see concrete measures done by respective Gulf governments, we will begin to focus on key regional catalysts more and more and see reactions beyond those we've had to international markets," said Mr Khan. "There's certainly an overall trend for markets to move up in the GCC, but it's still very early days to make definite predictions." Qatari banks led rises among financial stocks across the Gulf as investors bet companies may exceed first-quarter earnings forecasts. Improved global sentiment and firm oil prices also lifted shares in Kuwait and Bahrain. "Global market strength, with a subsequent firm oil price, is keeping investors excited in the GCC despite the earnings season being about to begin," said Mr Wakeman. Crude oil was selling at $54 a barrel. The Doha benchmark climbed 1.6 per cent to 5,207.88, its highest close since Feb 16. Bahrain's All Share Index advanced 0.75 per cent to 1,616.73. Kuwait's index rose 0.7 per cent to a three-month high of 7,313.60 after losing almost 5bn dinars (Dh62.24bn) in market capitalisation in the first quarter, or 14.9 per cent of its value, according to a report by Global Investment House. The Muscat index closed higher for a seventh consecutive trading session, rising 1.11 per cent to 4,859.98 driven by heavy buying in Bank Muscat and Galfar Enginering. Saudi Arabia's Tadawul exchange retreated in early trading as investors booked profits from the index's 3.2 per cent rise on Saturday that pushed it to a three-month closing high. The exchange ended trading yesterday down day 0.19 per cent to 5,190.33. [e-mail] Gulf markets, b10