Market rebound seen this week

DUBAI — UAE markets may experience a rebound towards the end of the week as valuations improve and following two days of losses brought about mainly by negative sentiment on the property sector. Investors have begun worrying the property market in Dubai has reached its peak and won't be growing any further.

By Jose Franco

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Published: Tue 12 Aug 2008, 11:32 PM

Last updated: Sun 5 Apr 2015, 11:53 AM

The government's plan to tighten lending rules and the bearish summer months, the dollar's rally and the mounting tension over Iran's nuclear programme for the low shares turnouts.

The markets have over-reacted as well to reports that property prices are seen to drop by 2010 as more development projects will be delivered by next year, ending a boom in the construction industry.

But the 10 per cent drop in prices as predicted by the US investment bank Morgan Stanley for the coming two years is a far cry from the 800-per cent growth since 2002, when foreigners were allowed to own property in selected areas in Dubai. Prices also rose by 25 per cent during the first-half of the year. Investors may have given weight to the Morgan Stanley report, considering its global stature, according to Chamel Fahmy, a senior regional sales trader at Beltone Securities. But he says the report must be read carefully since it remains bullish about the construction market despite a little correction in property prices.

He sees an upside potential for the Abu Dhabi Securities Market (ADX) General Index over the next few days, considering that listed developers had been doing well in the last 25 minutes of Monday's trading. He says the UAE markets will pick up by 2-3 per cent in a few days. "The people are waiting for the markets to move and which in three days might rebound," he adds. "Things will start picking up tomorrow." The real estate sector dropped 0.8 per cent, or 79.01 points, at the Dubai Financial Market (DFM) General Index.

DFM dropped one per cent, or 50.82 points, at 5,043.74, its lowest close since October 2007 while ADX had its lowest drop at 178.31 points since January, plummeting 3.8 per cent at 4,474.11.

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