Market watchers counsel caution amid global slide

Dubai: With signs of a credit crisis spreading globally, the UAE and the region are very much caught in the maelstrom. Two analysts have their take on the situation and the outlook.

Julian Bruce, director of Western institutional sales, EFG-Hermes, says, "Global issues predominate in the current environment and the GCC markets have been unable to stave off the problems besetting global equity markets.

"Furthermore the suggestions from some quarters of a downturn in the UAE property market have caused some panic selling, especially among retail investors.

"In the absence of any meaning to be garnered from underlying fundamentals the GCC markets must wait for consolidation elsewhere before staging any sort of recovery. That recovery may manifest itself sooner if there are universally very solid third-quarter numbers."

Shiv Prakash, an equity investment analyst (technical), at Mac Sharaf Securities, says, "Markets are in the firm grip of bear operators. According to the monthly pivot levels, the Dubai index, if it remains below the critical resistance of 4,220 we can see the fall until 3,172, 2,800, 2,600 in the medium term.

"There can be some corrective bounces, but they will be short-lived as the selling on every rise will be stronger.

"As of now in the current volatile situation investors should calculate their risk well before entering in the position and keep the strict stop loss accordingly as it is always better to come out on a smaller loss."