Dubai stocks hit 3-year high

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Dubai stocks hit 3-year high

Dubai shares surged to a three-year high on Sunday with Emaar Properties driving the upswing.

By Issac John

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Published: Tue 26 Feb 2013, 12:25 AM

Last updated: Sat 4 Apr 2015, 9:40 AM

Emaar, the builder of the world’s tallest structure Burj Khalifa, jumped 4.6 per cent after announcing its plan to build two luxury hotel and serviced apartment towers in central Dubai.

Arabtec Holding, the largest UAE builder by market value, rose to the highest level in almost three weeks. The benchmark DFM General Index gained 1.2 per cent to 1,945.95 points, the strongest close since November 2009.

Saleem Khokhar, head of equities at National Bank of Abu Dhabi’s Asset Management Group, told Khaleej Times that the week started off with real estate stocks leading the way. He said this positive momentum likely to continue. Names that were particularly strong include Emaar, Aldar and Sourouh. Emaar rose strongly on announcement of a new premium project — The Address Sky Views.

“Dubai real estate is showing fundamental strength and the upward move is likely to continue as the marco economy in the UAE continues to improve,” said Khokhar.

Shailesh Dash, chief executive of Al Masah Capital Management, said UAE markets were holding strong in spite of last week’s global selloff and the residual impact on regional markets this week.

“This inherent strength is in part due to the momentum that has built up based on last year’s performance and the stellar January gains. This momentum is tough to stop and very difficult to predict when it could slowdown, especially when it is being done on strong volume. However, at the first sign of trouble, sellers will move quickly to lock in hefty profits,” he cautioned.

Dash said the main driver for the current rally is real estate with both Emaar and Aldar driving the markets higher due to them being major components of the underlying indexes, although in Dubai Du and in Abu Dhabi, the banking sector have also contributed handsomely. “Recent strong earnings have emboldened the buyers and with the UAE markets coming off a very low valuation base, the sharp rise has fundamental support as well.”

He said for the health of the overall market, it is important that other sectors also contribute. “Otherwise we fall into the same trap pre-2008. Given the local economy has other much stronger contributors now, this needs to reflect in the local stock markets. However, we also know that is a function of the development of new IPOs and a more diverse offering which still need to come to fruition. Because of that lack of option, investors who are looking to capture the Dubai/UAE story will keep going back to the usual suspects,” said Dash. Dubai shares trade at an average price-to-book value of 0.8 times, compared with 1.8 times for stocks on Saudi Arabia’s Tadawul All Share Index, the Gulf’s largest bourse.

The 31 companies on Dubai’s measure trade at 11 times estimated 2013 earnings, compared with 11.3 times for the Saudi gauge.

Emaar surged to Dh5.26, the highest since November 2008. The company’s board will meet tomorrow to discuss a full year dividend after 2012 net income advanced 18 per cent. Emaar’s share price may rise to Dh6 as apartment sales pick up amid increasing demand, HSBC Holdings said early this month.

Arabtec advanced 1.3 per cent to Dh3.02, the highest level since February 5.

The DFM General Index’s 14-day relative strength index jumped to 75 on Sunday from 72 last week. A reading above 70 indicates to some analysts that a security or index is poised to decline. About 209 million shares were traded yesterday, compared with a 12-month daily average of 180 million shares.

Abu Dhabi’s ADX General Index gained 0.2 per cent.

Elsewhere in the Middle East, Saudi Arabia’s Tadawul All Share Index and Bahrain’s measure were little changed. Oman’s MSM30 Index declined 0.3 per cent. In North Africa, Egypt’s benchmark EGX 30 Index lost 0.8 per cent. Market in Kuwait was closed for holidays.

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