Dubai stocks rallied to the highest level this month as oil rose amid speculation China and the U.S. will take more measures to spur growth and on signs the emirate’s economy is recovering.
Emaar Properties PJSC (EMAAR), the developer of the world’s tallest skyscraper, advanced 2.1 percent. Tamweel PJSC (TAMWEEL), the Dubai-based mortgage provider whose shares doubled this year, soared to the highest since April. The DFM General Index climbed 0.9 percent to 1,571.39, the highest close since Aug. 26. Qatar’s gauge added 1.1 percent and emerging-market shares rose, with the MSCI EM Index gaining 0.7 percent at 2:04 p.m. in London.
The Federal Open Market Committee starts a two-day meeting today and may announce measures to stimulate the U.S. economy. Chinese Premier Wen Jiabao said the government has more room for fiscal and monetary policy to support growth. Crude for October delivery rose as much as 0.9 percent to $98.06 a barrel in New York as Germany’s top constitutional court cleared the way for the ratification of the euro area’s permanent bailout fund.
“The positive sentiments of international markets due to the expectation of more stimulus by the U.S. is encouraging investors to take more risk,” said Tariq Qaqish, the Dubai- based deputy head of asset management at Al Mal Capital. “Positive local news continues to build stronger investment sentiments in the U.A.E.”
The Bloomberg GCC 200 Index (BGCC200) rose 0.6 percent and Saudi Arabia’s Tadawul All Share Index (SASEIDX) gained 0.3 percent. Oman’s MSM30 Index (MSM30), Kuwait’s Stock Exchange Price Index (KWSEIDX) and Abu Dhabi’s ADX General Index (ADSMI) each increased 0.2 percent. Bahrain’s BB All Share Index (BHSEASI) was little changed. Gulf Arab oil exporters, including the United Arab Emirates and Qatar, supply about a fifth of the world’s oil.
Dubai’s economy is showing signs of recovery after narrowly escaping a default in 2009. Dubai Electricity and Water Authority, the Gulf emirate’s only utility, was upgraded today by one level to investment grade with a stable outlook at Moody’s Investors Service, which cited an improvement in the company’s “financial metrics and cash flows.”
Dubai Airports, home to the biggest Arab airline Emirates, this month said passenger traffic surpassed 5 million for the first time in July.
Dubai’s shares are valued at an average of about 10.3 times estimated earnings, compared with about 13.3 times for the MSCI World Index (MXWO) and 12 times for the STOXX Europe 600 Index, (SXXP) data compiled by Bloomberg show. About 157 million shares traded in Dubai today, compared with the 12-month daily average of 142 million shares.
Emaar advanced the most since Aug. 9 to 3.44 dirhams. The company, which has the biggest weighting on Dubai’s index, said in July second-quarter profit more than doubled as the emirate’s retail and tourism industries extend their best year since the 2008 property crash. The shares have surged 34 percent this year, compared with a gain of 16 percent for Dubai’s gauge.
Tamweel, up 121 percent this year, climbed 4.7 percent to 1.33 dirhams, the highest close since April 17.
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