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Dubai Shares Climb to 10-Month High, Paced by Air Arabia, Emaar Properties

Middle East : 26 February 2012

Source: Bloomberg

Dubai stocks jumped to a 10-month high as company earnings and dividends boosted investor confidence and after a Greek bailout and U.S. jobs data lifted global markets last week.

Emaar Properties PJSC (EMAAR), developer of the world’s tallest tower, rose 3.3 percent. Air Arabia (AIRARABI) PJSC climbed to the highest since April after reporting a 7 percent increase in profit. The DFM General Index (DFMGI) rallied 2.7 percent to 1,676.49, the highest since April 21, at the 2 p.m. close in Dubai. The measure, which entered a bull market last week, surged 29 percent from a low in January. The value of shares traded soared to the highest since April 2010 to 713 million dirhams ($194 million), according to data compiled by Bloomberg.

The 31 stocks in Dubai’s benchmark stock index are valued at an average 0.8 times net assets, or book value, below the average 1.7 times for emerging market stocks. Volumes have picked up this month, reaching 705 million shares today, six times the 12-month daily average of 117 million shares.

“The formula for good market performance was there: low foreign participation, low expectations, and very cheap valuations. All we needed was a catalyst,” said Fadi Al Said, a Dubai-based senior investment manager at ING Investment Management, which oversees about $518 billion worldwide. “Improved sentiment driving a global rally, higher-than- expected dividends, Emaar numbers and the United Arab Emirates’ economic recovery” also helped lift the market.

Economic Recovery

Dubai’s economy may expand as much as 5 percent this year after growing more than 3 percent last year, according to Sheikh Ahmed bin Saeed Al Maktoum, head of Dubai’s Supreme Fiscal Policy Committee.

U.S. stocks rose last week, with the Standard & Poor’s 500 Index (SPX) climbing to the highest level since 2008, after European finance ministers approved 130 billion euros ($175 billion) in aid for Greece by tapping into European Central Bank profits and coaxing investors into providing more debt relief to shield the region from a default. In the U.S., jobless benefits applications stayed at the lowest level since 2008, consumer confidence rose to a one-year high and purchases of new homes exceeded economists’ forecasts.

Emaar, the company with the heaviest weighting on Dubai’s index, said this month fourth-quarter profit more than doubled, beating analysts’ estimates, as revenue from malls and hotels grew. The shares gained to 3.14 dirhams, the highest since June 21. Air Arabia, the Middle East’s biggest discount airline, rose 0.7 percent to 74.6 fils, the highest since April 26. Fourth- quarter profit climbed to 78.7 million dirhams and the company said it plans to pay a cash dividend of 4.5 fils a share for 2011.

Higher Dividends

Dubai Islamic Bank PJSC (DIB), the U.A.E.’s biggest lender complying with Shariah rules, rallied 1.8 percent. The company posted a 25 percent rise in full-year profit this month and said it plans to pay a cash dividend of 15 percent, up from 10 percent a year earlier.

The Bloomberg GCC 200 Index (BGCC200) gained 0.3 percent and Saudi Arabia’s Tadawul All Share Index (SASEIDX) increased 0.2 percent, its seventh day of gains. Oman’s MSM 30 Index (MSM30) rose 0.4 percent and Qatar’s QE Index (DSM) increased 0.5 percent. Abu Dhabi’s ADX General Index (ADSMI) advanced for a sixth day, gaining 1.3 percent. Bahrain’s BB All Share Index (BHSEASI) retreated 0.9 percent. Kuwait’s market was closed for a national holiday. In North Africa, Egypt’s EGX 30 Index (EGX30) rallied 2.5 percent.

Israel’s TA-25 Index declined 2.3 percent, the most since Dec. 29 as Bank Leumi Le-Israel and Israel Chemicals Ltd. retreated. The yield on the country’s 5.5 percent notes due January 2022 rose two basis points, or 0.02 percentage point, to 4.65 percent.

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