According to Bruce Powers, a Dubai-based technical analyst and financial commentator, “it seems like investors have now distinguished between Dubai’s problems and [those of] Abu Dhabi.”

On a relative basis the Abu Dhabi Securities Exchange General Index (ADI) has been showing strength compared with the Dubai Financial Market General Index (DFMGI).  That strength is likely to continue into the foreseeable future barring conclusion of Dubai’s debt restructuring.  Although there are similarities in the chart patterns of each market, the ADI has broken through its downtrend line resistance level while the DFMGI remains below it.

Herd-caused contagion afflicted the perception of risks for assets across the Gulf last fall on worries about possible Dubai-related defaults, as well as questions over the emirate’s vision for its long-term financing.  At their peak, even credit default swaps for five-years bonds jumped 177 basis points for Abu Dhabi, and 119 for Qatar, respectively, despite no apparent concern per se over the strength or volatility of their cash flows.  Analysts noted, for instance, that Qatar has the world’s second largest gas reserves, and oil-rich Abu Dhabi has the biggest sovereign wealth fund, worth approximately $700bn.

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