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Equities Rise on Hopes of Property Recovery

Rocel Felix / 6 October 2009

DUBAI - UAE shares rose on Monday, with Dubai climbing to its best finish in nearly a year as fresh hopes of a recovery in the property sector, along with assurances by the Dubai government it can pay its debts due this year, stirred buying interest.

The main index of the Dubai Financial Market edged up by 2 per cent to 2,236.50, its best close since November 11 when it ended at 2,345.15. The benchmark of the Abu Dhabi Securities Exchanged inched up by 0.7 per cent to 3,150.77.

The Dubai government’s assurances that it will be able to settle its maturing debts this year  helped to shrug off the market’s initial weak start, said Ali Khan, managing director of Arqaam Capital Limited.

Shaikh Ahmed bin Saeed Al Maktoum who is also the chairman of Dubai’s  Emirates Group and a member of the emirate’s financial crisis committee said on Monday that Dubai is capable of paying its debts in 2009 of about $4.5 billion.  The government-owned property company, Nakheel,  has debts of $3.5 billion maturing in December, and  a  $1-billion Islamic bond is also due this year.

“The reassurance that payment will be made alleviated lingering concerns about Dubai’s ability to meet its debt obligations. It gave investors more confidence, and that should further encourage buying into the markets,” said Khan of Arqaam Capital.

Dubai index mover and the Middle East’s biggest property developer, gained 2.7 per cent at Dh4.16. 

Dubai Holding Managing Director Ahmed al-Matrooshi was quoted as saying in a report that Emaar is evaluating the assets of Dubai Properties LLC, Sama Dubai LLC and Tatweer, before these are merged with Emaar.

Deutsche Bank also maintained its ‘buy’ rating and raised its target price for Emaar to Dh5.52 from Dh5.02, saying that dilution risk related to its merger with Dubai Holding’s units were exaggerated.

Investors focused on companies participating in the annual Dubai Cityscape which is being held a year after property prices in the emirate have nearly halved from their peak prices in 2008. A five-year property boom was abruptly halted as the global economic slump worsened, resulting in massive job losses among expatriates in Dubai who fueled demand in the sector. 

“Despite the expected lower turnout at this year’s exhibition and with no expected new big projects to be announced, the fact that it was still being held, supported the belief that the property sector, especially in Dubai, is capable of weathering the storm,” said Marwan Shurrab, chief trader at Gulfmena Alternative Investments.

Arabtec Holding, the country’s largest construction company, surged by 4.2 per cent to Dh3.49 on news it began foundation tests on its Gasprom Neft project in Russia. Deyaar Development jumped by 4.7 per cent. The company said on Sunday its Dh4-billion Central Park joint venture  with Dubai Properties Group is 64 per cent complete.

Property shares in Abu Dhabi also rose, led by  RAK Properties which added 3.6 per cent at Dh0.86, Top-ranked Aldar Properties rose nearly 1 per cent at Dh6.10, while second-ranked Sorouh Real Estate gained 1.5 per cent at Dh3.98.

Banks in Abu Dhabi also rose, led by First Gulf Bank which edged up by 4 per cent to Dh1.04, while Investbank added 5.8 per cent to Dh1.90.

·         rocel@khaleejtimes.com

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