Analysts predict further corrections but believe there will be an uptick by the end of the week
Dubai: The Dubai stock market on Monday experienced its strongest correction since August 2013 as the Dubai Financial Market index (DFM) dropped 280.45 points to close 5.46 per cent down at 4,855.50.
Analysts said the correction was expected, and predicted a further corrections on Tuesday, though they expected the market to start recovery by the end of the week.
“From the start of this year we are more than 55 per cent up, which is something unusual for any market in the world,” said technical analyst Mohammad Al Saadi. “We haven’t had any actual correction since the start of the year.
“I think it’s very healthy for the market to correct. I was expecting this for a long time.”
Al Saadi said the DFM had support at 4,820 points. “This is short-term support. If we can hold this level we are going to see a rebound, but if it breaks we might see 4,650.”
Osama Al Ashri, a member of Britain’s Society of Technical Analysts, agreed, though put the main support at 4,583. “If it breaks that, it will no longer be a correction, it will be a trend change, but if it keeps above it we will consider it a correction.
“I do not find high risk. I feel it will go down again, but will have a positive close at the end of this week.
“The property sector has gone up very strongly, 400 per cent, without a correction. If you collate the data percentage for Arabtec, one year ago it was 74 fils, and it went up to Dh11 with dividends. In one year. your money’s gone up 14 times — this is abnormal. So a strong correction like this is normal.”
The Abu Dhabi Securities Exchange index (ADX) also experienced a decline on Monday, closing 2.34 per cent down at 4,869.57.
“The ADX story is different,” Al Saadi said. “The market didn’t gain as fast as the Dubai market; we cannot compare the two.”