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Markets nadir not yet says Dubai Capital.

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One of Dubai's biggest investors believes Gulf equity markets still have further to fall but that the region's two biggest bourses -- Saudi Arabia and Dubai -- will bounce back by the end of the year.

'These markets are trying to search for a bottom,' said Mustafa Farid, chief executive officer of the Dubai Capital Group, which controls $2.6 billion in investments in the Middle East and North Africa.

'I don't like it if the market recovers quickly,' he told Reuters by telephone. 'It should consolidate.'

Leading indexes in Dubai and Saudi Arabia should rise 20-30 percent from their nadir -- which has yet to be reached -- by year end, he said.

The DFM general index, which has fallen 28 percent so far this year, fell another 2 percent on Sunday, while the Saudi's blue chip measure, which has fallen 29 percent this year, gave up another 2.8 percent.

Emerging markets stocks, as measured by MSCI, have fallen over 36 percent so far this year.

Farid said he expected Dubai Capital's performance to be robust despite sharp falls in regional equity indices. The group is a key shareholder in a number of regional firms like Global Investment House, Bank Muscat and Tamweel.

'I think our track record in the years before have proved that this year will be like the years before,' he said. 'This year it's still massively a plus relative to the rest of the funds in the region.'

Dubai Capital has posted an annual average rate of return of 58 percent from its inception in 2003 to the end of 2007, with double digit returns each year including in 2006, when the regional index for the Middle East and North Africa was down 37 percent.

Dubai Capital earlier on Sunday unveiled a 500 million dirham ($136.1 million) investment, or a 20 percent stake, in Mazaya Saudi, a real estate development firm in which Kuwait-listed Al Mazaya Holding holds an important stake.

Farid said he expected Mazaya Saudi, which aims to capitalise on rapid growth in the Saudi housing sector, to pursue a public listing in four to five years and that Dubai Capital would likely increase its stake in the firm. - Reuters

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Publication:TradeArabia (Manama, Bahrain)
Date:Sep 14, 2008
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