Dubai Shares Gain Most in 11 Months as Local Debt Concerns Fade, Oil Rises

Dubai’s shares surged the most in almost a year on investor confidence debt-burdened companies in the emirate will meet payment obligations without government support and as quarterly earnings beat estimates.

Emaar Properties PJSC (EMAAR), developer of the world’s tallest skyscraper whose fourth-quarter profit topped expectations last week, advanced the most in almost a month. Dubai Islamic Bank PJSC (DIB), the United Arab Emirates’ biggest lender complying with Shariah rules, rallied 3.3 percent. Dubai’s DFM General Index (DFMGI) advanced 3.6 percent, the most since March 13, to 1,571.09 at the 2 p.m. close in the emirate. The Bloomberg GCC 200 (BGCC200) Index rose 0.8 percent.

There has been “increasing positive sentiment with Dubai entities saying debt will be repaid without government assistance,” said Julian Bruce, director of institutional sales trading at EFG-Hermes Holding SAE in Dubai. With “full-year earnings looking much more healthy and some companies recommencing dividend payments,” trading volume has also improved, he said.

Dubai, which teetered on the brink of default in 2009, expects two of its main companies to refinance $3.25 billion of debt this year without government help as growth accelerates, Mohammed Al Shaibani, director general of the Dubai ruler’s court, said Feb. 15. Dubai has “no intention” of seeking support from Abu Dhabi, he said. Abu Dhabi gave $20 billion to its neighbor in 2009 to help restructure debt.

Beating Estimates

Dubai economy’s may expand as much as 5 percent this year after growing more than 3 percent in 2011, Sheikh Ahmed bin Saeed Al Maktoum, the head of Dubai’s Supreme Fiscal Policy Committee, said last week.

Emaar shares rallied 3.9 percent, the most since Jan. 25, to 2.97 dirhams. The company with the heaviest weighting on Dubai’s index said on Feb. 14 fourth-quarter profit more than doubled, beating analysts’ estimates, as it cut costs and generated more revenue from hotels and international operations. Dubai Islamic posted a 25 percent rise in full-year profit, meeting estimates. Dubai Islamic also said it plans to pay a cash dividend of 15 percent for last year. The shares rose to 2.22 dirhams, the highest since May 3.

About 397 million shares were traded in Dubai today, almost four times the 12-month daily average of about 109 million shares.

Oil Above $100

The Dow Jones Industrial Average (INDU) gained 0.4 percent in New York on Feb. 17 to 12,949.87, the highest close since May 2008, on improved economic data. Oil for March delivery rose 0.9 percent to $103.24 a barrel on the New York Mercantile Exchange on Feb. 17, the highest settlement price since May 10. Gulf Arab oil exporters, including Qatar and the U.A.E., supply about a fifth of the world’s oil.

“The positive sentiment is coming from the U.S.,” said Nabil Farhat, a partner at Abu Dhabi-based Al Fajer Securities. “The U.S. markets are moving ahead despite the confusion coming out of Greece,” helping lift local shares, he said.

German Chancellor Angela Merkel, Italian Prime Minister Mario Monti and Greek Prime Minister Lucas Papademos discussed a second Greek bailout on a conference call and are optimistic finance ministers will resolve remaining issues when they meet on Feb. 20, according to Steffen Seibert, Merkel’s chief spokesman.

Oman’s MSM 30 Index (MSM30) and Bahrain’s BB All Share Index (BHSEASI) gained 0.3 percent. Qatar’s QE Index (DSM) increased 0.9 percent and Kuwait’s Stock Exchange Price Index (KWSEIDX) jumped 1.7 percent, the most since March 13. Abu Dhabi’s ADX General Index (ADSMI) and Saudi Arabia’s Tadawul All Share Index advanced 0.6 percent.

In North Africa, Egypt’s EGX 30 Index (EGX30) rallied 2.9 percent to 5,113.08, the highest since July 21. Israel’s TA-25 Index (TA-25) climbed 0.6 percent. The yield on the country’s 5.5 percent notes due January 2022 rose one basis point, or 0.01 percentage point, to 4.57 percent.

To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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