Dubai Financial Market general index broke above a major technical resistance and hit a fresh 55-month high on Sunday, as mid-cap stocks surged on the back of positive economic data and speculations about upcoming market upgrade. Investors and traders tend to believe that MSCI will elevate the United Arab Emirates to emerging market status from frontier territory when the annual index reclassification is unveiled on June 11th.
Read more: Frontier Markets ETFs Soared in May
Dubai’s index jumped 2.7% to 2,430 points, its highest close since November 2008. The market however, is still 61% below its pre-crisis 2008 peak.
Abu Dhabi’s benchmark climbed 0.8% to finish at 3,590 points, its highest close since October 2008 but still nearly 50% below its peak of that year.
In Dubai, Gulf Navigation surged 14.9 percent, Dubai Financial Market, the Gulf’s only listed bourse, jumped 14.7 percent, both stocks at limit up – the maximum daily rise. Drake & Scull climbed 6.9 percent, extending 2023 gains to 54.8 percent. Dubai stocks have not seen such aggressive actions from investors since long time.
Mid-caps are catching up to a rally in bluechips earlier this year as prices picked up to reflect an improvement in fundamentals.
Dubai property prices are in a process of gradual recovery in recent months, following a slump between 2008 and 2012. In addition, banks reported improving earnings as provisions declined. UAE banks were heavily exposed to government debt, which has largely been restructured.
The UAE market has lagged since the post-financial crisis, while analysts say a rebound in emerging markets was observed. The strong recovery in underlying economy wasn’t reflected into Dubai stocks, traders say.