Markets Update: Dubai's market rose to its highest point in the week as revived optimism over whether the UAE will be upgraded to emerging markets prompted buying.
Dubai shares open with biggest gains in two weeks
Dubai shares staged their biggest daily gain in more than a fortnight on expectation that the UAE will become an emerging market when a decision is announced next week.
Market players said positive sentiment over whether index compiler MSCI's decision will upgrade the UAE and Qatar from "frontier" to "emerging" was prompting investors to jump into the market.
The Dubai Financial Market General Index extended gains it has made all week as it advanced 1 per cent at 1,583.41 points, its highest intraday gain since the end of May.
The Abu Dhabi Securities Exchange General Index was trading 0.6 per cent higher at 2,728.39 points.
Fathi ben Grira, the chief executive of Mena Corp brokerage firm, said he had started recruiting in anticipation of a possible upgrade.
"It makes no sense for [the UAE] to be in the same category as Tunisia and Bangladesh [which are considered frontier markets]," he said.
Emaar Properties, the property bellwether, climbed 2.24 per cent to Dh3.20, its highest price in two weeks. More than 14 million shares in the company changed hands, making it the most heavily traded in Dubai.
Aldar Propeties and Sorouh were among the top market movers in Abu Dhabi as shares in those companies gained 3 per cent to Dh1.38 and 1.5 per cent to Dh1.34.
But volumes were still light on the exchange, which prompted some fund managers to express scepticism over the strength of the rally.
"We haven't seen a big rebound in terms of volumes, and if this continues, there won't be much conviction behind a rally," said David Verghese, a fund manager at Emirates NBD.
Volumes in Dubai and Abu Dhabi have totaled little more than 100 million shares combined, compared to triple these volumes at the height of the property boom in 2008.