x Abu Dhabi, UAEThursday 18 January 2018

Tamweel stock back on the list of hot buys

Tamweel shares rise on valuation grounds as Dubai property market shows signs of revival.

It did not take long for Tamweel to reclaim its status as one of the most attractive stocks traded on the Dubai bourse.

After resuming trading on May 10 from a suspension lasting more than two years, shares in the mortgage company have traded at incredibly high volumes - a total of more than 400 million shares.

The first three days produced a sell-off but since then the stock has steadily increased in value. Yesterday, more than 90 million shares changed hands, boosting Tamweel's share price by more than 8 per cent to 94 fils. The shares were suspended in 2008 after the global financial crisis froze credit markets and blocked the company's access to funding.

"There is a new base of investors who are coming at 80 fils a share and are interested in trading in the short term, and institutional investors who are taking positions on valuation grounds," said Marwan Shurrab, the chief trader at Gulfmena Investments in Dubai.

So what triggered this demand? Analysts said at 94 fils the stock still traded at a discount when compared with the company's book value, which Mr Shurrab estimated at Dh2.25.

That has prompted retail investors, speculators and institutional investors to hop on the bandwagon in the belief the share price will appreciate in the medium to long term, despite the risk involved with the business.

By all accounts, transactions are on the rise in the Dubai property market. As civil unrest unfolded in the region, people from Bahrain to Egypt saw Dubai as a safe haven.

Prices on property in high demand areas such as the Dubai Marina, the Palm Jumeirah and Arabian Ranches are picking up again.

The drop in deliveries by major property developers has helped to support prices.

And at the heart of any maturing property market is mortgage financing.