DUBAI UAE shares rebounded off 15-month lows yesterday with liquid stocks leading a rally in both markets, but analysts warned that the recovery was likely to be short-lived.
Dubai's main index closed 3.42 per cent up at 506.91 points, having crashed below 500 points on Sunday for the first time since February 2005. Abu Dhabi rose 2.79 per cent to 3,452.34 points.
The Dubai index is still down 51 per cent this year in tandem with regional markets and Abu Dhabi has fallen 35 per cent. "It will be a long while before anyone can say the markets are out of the woods," said Mohammed Yasin of Emirates Securities.
"Speculators are still the majority in the markets and there will be more profit taking. We won't see a recovery until liquidity improves and institutional investors do not have the means now to provide it," he said.
Mohammed Alami of Naeem Brokerage in Dubai said next week would be crucial given that May 15 was the deadline for subscription to the final 25 per cent tranche of a one-for-one rights issue by bellwether Emaar Properties.
Investors have tended to liquidate positions to buy new shares. Two simultaneous initial public offerings in March were blamed for Dubai's sharpest one-decline in years.
"If we get past May 15 at these levels that will mean the bottom is in sight. But it looks unlikely," said Alami.
Emaar powered yesterday's rally in Dubai much as it led the way down after breaking below the 14 dirham ($3.81) level that brokers said triggered a flurry of margin calls. Emaar closed 2.49 per cent up at 12.35 dirhams and was the most heavily traded stock in Dubai.