Dubai's Default Risk: Better than Portugal, Worse than Egypt

Sheikh Mohammed believes that Dubai has recovered from the impact of the global economic crisis. However, it seems that finincial markets aren't as convinced.

The table below (via the Think Big blog) ranks sovereign credit deafult swap (CDS) prices. CDS's are like insurance policies against a default with higher CDS prices reflecting a higher chance of default.

As you can see, Dubai has a high risk of default ranking.  The fact that Dubai sits between Portugal and Egypt in the rankings says it all.

Of course, markets have been known to be wrong when it comes to pricing risk.  On the other hand leaders and politicians are almost never correct when it comes to making economic predictions (Sheikh Mohammed certainly didn't forsee the meltdown that Dubai's economy experienced over the past two or three years).

The problem for Dubai is that, just like Greece and Ireland, it now has a mountain of debt to service and repay.  That debt is going to be a serious drag on the economy going forward. And judging by the CDS price some investors are predicting that Dubai, in the end, won't be able to pay those debts back in full.

Enjoy.

Weekly Market Analysis (Week 11)

The weekly market analysis pages have been updated for trading week 11 (March 12th - March 18th).  Use the links below to view the individual market analysis pages:

Dubai   -   Abu Dhabi  -   Saudi   -   Kuwait   -   Qatar   -   Bahrain   -   Muscat

The table below shows the market outlook based on each study.

Visit the links above to view the full analysis reports for all GCC markets.

Enjoy.

March Seasonality

Historically, March has been good month for GCC stock markets.  However, that was also the case for February but last month definitely didn't conform to historical tendencies.

The chart below shows the average daily percentage change for each GCC market during each calendar month.

As you can see, the average daily percentage change during March has been positive for all markets except Bahrain.  However, with the continuing political and social unrest in the region I wouldn't place too much weight in seasonal effects at the moment.

Enjoy.

P.S.  It should be noted that we're dealing with a very small data set for this analysis.  My data only goes back as far as 2004 for GCC equity markets so there have only been seven prior instances of each calendar month. It's hard to draw any concrete conclusions from such a small data set.

Weekly Market Analysis (Week 10)

The weekly market analysis pages have been updated for trading week 10 (March 5th - March 11th).  Use the links below to view the individual market analysis pages:

Dubai   -   Abu Dhabi  -   Saudi   -   Kuwait   -   Qatar   -   Bahrain   -   Muscat

The table below shows the market outlook based on each study.

Visit the links above to view the full analysis reports for all GCC markets.

Enjoy.

GGC Stock Markets Go Oversold

Below are the long-term price and RSI charts for the GCC stock indexes.  With the recent price fall it's not surprising that many markets are now in oversold territory.

In a follow-up post I'll take a look at what these oversold levels mean for the markets going forward.

Enjoy.

GCC Index Performance: February

Given the political situation in the MENA region at the moment it's not surprising that February was a bad month for GCC stock markets.

The Muscat 30 Index was the worst performer, dropping by 10.18% with the Qatar market not far behind with a 9.29% fall.  Dubai, Saudi and Kuwait all fell by over 5%.

Despite Bahrain's problems the country's stock index dropped by just 1.25% in February.  However, but for the complete lack of liquidity in the Bahrain market at the moment (many stocks did not trade at all during February) I think the index falls would be a lot, lot worse.

Abu Dhabi was the best performer, managing to eek out a small gain (0.08%) on the month.

On a year-to-date basis the picture doesn't get any better.  All stock indexes are down for the year with the Dubai market having already lost over 13% in 2011.

Enjoy.

Dubai Stocks Make New Bear Market Low

Bad day for the Dubai market yesterday. The DFM General Index was down 3.83% for the day, finished down 8% for the month and made a new barket market low.

The Index closed at 1410.70.  That's the lowest level since the previous bear market low was made in Februrary 2009.  The first time the Index was trading at the current level was.........wait for it.........back in June 2004! 

The good news is that the DFM General Index can only go down another 1,410 points before it hits the zero level.  I'm fairly confident that it can't go any lower than that.

Enjoy.