Investors are set to take their cue this week from the UAE as the earnings reporting season gets under way.
The Dubai Financial Market General Index jumped 3.7 per cent on Wednesday, reaching a high of 1,545.21 for the week as investors banked on second-quarter results from the property and construction sector outperforming analyst expectations.
"What the market is trying to do is to price in strong second-quarter numbers in the real estate recovery within the country," said Marwan Shurrab, the vice president and chief trader at the asset manager Gulfmena Investments in Dubai. "The UAE has [also] stood out as a safe haven for other countries [in the Middle East]."
Last week, Emaar Properties, the developer of the world's tallest building, the Burj Khalifa in Dubai, jumped 5.1 per cent.
Analysts polled by Reuters expect Emaar to report a net income of Dh516.3 million. The developer made Dh249.9m during the same period last year.
"People have realised the diversification story for Emaar is doing well with hotel occupancy rates at 96 per cent and high retail footfall in Dubai Mall," said Sebastien Henin, a portfolio manager at The National Investor in Abu Dhabi.
"Now there is a good buffer, Emaar is not just a defensive stock now but also a growth stock.
"From a valuation point of view, it maybe not be a bargain in net asset value but within the sector of properties it's probably the safest bet you can take," he said, adding Emaar was trading at some 10 times to earnings.
Arabtec Holding advanced 4.5 per cent to Dh2.99. Analysts forecast the Dubai contractor will post a quarterly profit of Dh78m. Arabtec reported a net income of Dh28.9m last year.
The shares rose 97.4 per cent this year as the Abu Dhabi government-controlled fund Aabar Investments built up a 20.8 per cent stake in Arabtec, according to data available on the bourse's website.
In April, Arabtec was awarded a Dh222m contract to build a 23-storey residential tower in Abu Dhabi.
Last month, the contractor, alongside a consortium of others, won a Dh10.8 billion contract from Abu Dhabi Airports to build the Midfield Terminal complex.
"Arabtec's price reflects a lot of future improvement in the business pipeline, margins and contracts," said Fadi Al Said, the head of investments at ING Investment Management in Dubai. "It is not expensive on a regional level but on a global level."
Arabtec is trading at about 15 to 18 times earnings, Mr Al Said said.
Drake & Scull International (DSI) gained 2.3 per cent to 82 fils.
Analysts forecast the emirate's second-biggest contractor would post a profit of Dh46.7m. DSI reported net income of Dh51.2m.
"DSI's shares are cheap, trading at nine times earnings," said Mr Al Said. "I prefer DSI over Arabtec."
Trading was subdued in the capital, with only a select number of stocks traded.
The Abu Dhabi Securities Exchange General Index was little changed, up 0.06 per cent, closing at 2,467.96 on Thursday.
Last week, Aldar Properties jumped 1.8 per cent to Dh1.13, while Sorouh Real Estate gained 0.9 per cent to Dh1.03.
"Low turnovers are able to control the market and pull it up to a higher level," said Mr Shurrab.
Aldar, the developer behind Yas Island and Ferrari World, is expected to report a profit of Dh40.3m. The company posted a net income of Dh127.32m last year.
