Markets Update: Emaar advances to highest level in more than two years, as investors optimistic that Dubai companies will post full-year profit growth.
Dubai shares hit nine-month high on back of economic recovery
Dubai's shares today climbed to a nine-month high on bets some of the emirate's biggest companies will post full-year profit growth as the economy recovers.
Emaar Properties, developer of the world's tallest skyscraper, advanced to the highest level in more than two years.
Emirates NBD, the biggest United Arab Emirates bank by assets, rallied 3.9 per cent. The DFM General Index rose 1.1 per cent to 1,699.99, the strongest intraday level since April 5, shortly before 11am in Dubai. The measure added 4.4 per cent last week after United States lawmakers passed a bill averting the so-called fiscal cliff. Abu Dhabi shares increased 0.4 per cent today.
"Expectations for annual results are strong," said Nabil Al Rantisi, managing director of brokerage at Abu Dhabi-based Menacorp, who added that the US budget news was also supporting shares.
A revival in real estate, retail and tourism helped Dubai's economy expand 4.1 per cent in the first half of 2012, putting the emirate on track to reach the government's 5 per cent forecast for the year, government data show. That would be the fastest pace of growth since 2007. Emaar Properties, which has the heaviest weighting on Dubai's index, probably posted 15 per cent growth in profit last year, according to the average estimate of 11 analysts compiled by Bloomberg.
Gulf Cooperation Council (GCC) shares are luring investors as they offer attractive valuations relative to emerging-market peers, Franklin Templeton Investment Management said last week. Dubai's measure, the best performer in the six-nation GCC in 2012, trades at an estimated price-to-earnings ratio of 9.44 times, versus 11 times for the MSCI Emerging Markets Index.
Emaar, which will probably report results on February 14, advanced 1.8 per cent to 3.98 dirhams, set for the highest close since October 2010. The stock rallied 46 per cent in 2012, recovering from two years of declines. Emirates NBD, which may report the same day, surged to 2.96 dirhams, poised for the highest level since October 18. The bank's fourth-quarter profit may triple, according to the median estimate of three analysts on Bloomberg.
Mortgage provider Tamweel decreased 1.7 per cent after Dubai Islamic Bank offered to take over the company through a share swap. Tamweel shares, which resumed trading in May 2011 after being suspended since 2008, will be delisted from the Dubai stock market after completion of the takeover. Dubai Islamic shares were unchanged.
Dubai's 14-day relative strength index surged to 77 today. A reading above 70 indicates to some analysts that a security or index is poised to decline. The gauge's 10-day volatility is at the highest level since October, data compiled by Bloomberg show.
Elsewhere in the GCC, Abu Dhabi's ADX General Index's gain brought a six-day rally to 3 per cent. Qatar's QE Index rose 0.5 per cent. Oman's MSM30 Index, Bahrain's measure and the Bloomberg GCC 200 Index of the biggest companies in the GCC advanced 0.2 per cent. Kuwait's gauge was little changed.