Today the Dubai Stock Market DFM rebounded from it’s low yesterday on a relatively high turnover. The last few days since the shocking announcement of Dubai World had obviously an impact on the stock markets of the United Arab Emirates. Let’s analyze what happened so far:

The DFM (Dubai Financial Market) reached it’s high mid October at 2373 index points. The last few weeks it lost 35%, going down to as low as 1533 index points yesterday. This happened without many buyers on the market, and obviously if nobody buys the market is falling even faster. It was interesting to see though that board-members and people involved in companies kept on buying their own companies shares. This is a sign that the market is overreacting since these people know their companies best one would guess. In between there was a little rebound, followed by an even steeper fall.

So now the Dubai Market needs to gain a full 55% to go back to the last high. Will this happen? And if yes – how long will it take?

Todays rebound, with names like Emaar, DFM, ALISLAMI on top of the winners list and Arabtec, Union Properties, DFM being traded with the highest volumes, is definitely a good start. The market closed with  7.00% in the green today at 1640.76 index points.

If Dubai World has to delay its payments of debts or even defaults, how would this impact other companies in Dubai not under the same umbrella? Some ratings might go down. International investors might be scared to invest in Dubai. But the bottom lines of these companies are still the same, they still make the same profits or losses, right? So why should those be penalized? I think the announcements for the solution to Dubai World’s problems and even more the 4th quarter results of Dubai’s companies will show what direction the stock market will take in the longer term. The impact was definitely heavy, and a lot of money was lost from the ones who sold (or had to sell) and also gained from smart investors who bought at the low prices yesterday and sold today. Let’s just hope they don’t loose it all over again on Sunday once the market reopens…

What do you think?