Dubai stocks rose the most in almost three weeks on bets last week’s drop was overdone given the outlook for earnings and as crude price increased after U.S. employment figures signaled higher fuel demand.
Emaar Properties PJSC (EMAAR), developer of the world’s tallest skyscraper in Dubai, soared to the highest since October 2008. Arabtec Holding Co. (ARTC), the largest United Arab Emirates builder by market value, rose 0.9 percent after tumbling 21 percent last week. The benchmark DFM General Index, which last week posted its first weekly decline in four weeks, gained 1.5 percent, the most since Feb. 19, to 1,909.39, at the close in the emirate. Israeli shares surged as investors bet a government coalition is near.
“Last week’s profit-taking was excessive considering the outlook for economic growth and earnings in Dubai,” said Waleed Al Khateeb, Dubai-based senior finance manager at Daman Securities LLC. “The general sentiment is strong and the performance of global stocks last week helped.”
A drop of 2.3 percent last week left Dubai’s shares valued at an average price-to-book value of 0.8 times, compared with 1.8 times for stocks on Saudi Arabia’s Tadawul All Share Index, (SASEIDX) the Persian Gulf’s largest bourse, data compiled by Bloomberg show. The 31 companies on Dubai’s measure trade at about 10.7 times estimated 2013 earnings, compared with 11.3 times for the Saudi gauge.
Emaar is the best performing stock on Dubai’s gauge this year as it benefits from a recovery in the emirate’s property market after prices tumbled more than 65 percent from a 2008 high. The economy may have expanded 5 percent in 2012, the fastest pace since 2007, as tourism, hotel and restaurant industries pick up, government forecasts show.
The shares rose 3 percent to 5.56 dirhams, bringing a rally in 2013 to 48 percent. That compares with a gain of 18 percent for the DFM General Index. (DFMGI) The company is poised to post a nine percent increase in 2013 earnings after an advance of 18 percent last year, according to the mean estimate of 11 analysts compiled by Bloomberg.
Crude oil for April delivery gained 1.4 percent last week to $91.95 a barrel on the New York Mercantile Exchange. Gulf Arab oil exporters, including the U.A.E., supply about a fifth of the world’s oil. The better-than-expected jobs data in the U.S. helped the Dow Jones Industrial Average (INDU) extend a record high. The MSCI Emerging Markets Index (MXEF) last week gained 1.2 percent, it’s biggest five-day gain since the first week of January.
Arabtec advanced to 2.14 dirhams, the highest level since March 4. The company’s shares last week tumbled on investor concern the Dubai builder’s capital increase plans may dilute the shares given the conversion price and after full-year profit missed estimates.
The DFM General Index’s 14-day relative strength index rose to 57 today from 51 at the close last week. A reading above 70 indicates to some analysts that a security or index is poised to decline. About 242 million shares were traded today, compared with a 12-month daily average of 162 million shares.
Elsewhere in the Middle East, Abu Dhabi’s ADX General Index (ADSMI) gained 0.4 percent and Bahrain’s measure advanced 0.7 percent. Oman’s MSM30 Index climbed 0.1 percent while Kuwait’s gauge increased 0.8 percent in its 10th day of gains. Saudi Arabia’s Tadawul All Share Index fell 0.1 percent. In North Africa, Egypt’s benchmark EGX 30 Index advanced 0.6 percent.
“The market is optimistic following nearly two months of uncertainty since the elections about what form the government would take,” Zach Herzog, head of international sales at Psagot Investment House Ltd. in Tel Aviv, said by phone. “So the reports of a significant progress toward a coalition agreement this week is providing a catalyst for the rise.”
The yield on the government’s benchmark 4.25 percent bonds due 2023 rose six basis points, or 0.06 percentage point, to 3.99 percent.
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