Dubai : The Dubai Financial Market (DFM) General Index may advance 9.7 per cent by the end of May as Dubai World presents a final debt proposal to creditors and European investors increase holdings of local shares, Shuaa Securities said.
The gauge will advance to as high as 1,850 if it breaks through the technical resistance level of 1,825, said Mohammad Ali Yasin, CEO at Shuaa Securities in Abu Dhabi. The estimates are based on the weekly trend-line support and a 200-day moving average. The benchmark index fell 1.7 per cent to 1,685.76 on Wednesday, the lowest level since March 11.
The measure has slumped 19 per cent since November 25 when Dubai World said it would seek to delay repaying debt until at least May 30. The company is aiming to alter the terms of about $24.8 billion of borrowings, including obligations from Nakheel.
The final proposal will "clear a big hurdle in terms of the negative impact Dubai World has had on the market," Yasin said in an interview in Abu Dhabi. "The effect of the proposal on banks and provisioning will be clear and the market will be able to recover."
The credit crisis in Europe and the decline in the euro may prompt investors to increase holdings of emerging-market assets, Yasin said.
The euro on Wednesday reached the weakest level in more than four years against the dollar and the pound slumped to a 13-month low as Germany's ban on some speculative sales triggered concern that Europe's debt crisis will worsen.
"As the euro goes down, investors will be attracted to dollar-pegged currencies in the East, pushing liquidity away from the US and Europe and towards local markets," Yasin said.
Kuwait is the only country among the six Gulf Cooperation Council states that doesn't peg its currency to the dollar.
