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Dubai Shares Rise to Highest Since 2009 on Economy Recovery Bets

Dubai shares climbed to the highest in more than three years on bets economic growth in the emirate will accelerate, pushing its credit risk lower.

Dubai Islamic Bank PJSC (DIB), the emirate’s biggest bank complying with Muslim banking rules, surged to the highest in more than three years. Emaar Properties PJSC (EMAAR), the developer set to report results this week, rose to the strongest level since March. Drake & Scull International PJSC (DSI) soared the most in since December 2009. The Dubai Financial Market General Index (DFMGI) gained 1.6 percent to 2,108.63, the highest since November 2009.

Dubai, the second-biggest sheikhdom in the United Arab Emirates, is recovering from a property crash and a debt crisis helped by a rebound in the tourism, trade and retail industries. The economy is set to expand 4.6 percent, on average, between 2012 and 2015, more than twice the average growth in the prior four years, government forecasts show.

“This is an extension of the early economic upswing,” Talal Touqan, head of research at Al Ramz Securities LLC, said by e-mail. Stock values are being raised as “risk perception of Dubai improves,” he said.

Investor confidence in Dubai has recovered after three state-linked companies paid or refinanced $3.75 billion of debt in 2012, helping push the emirate’s credit risk to almost a fifth the level it was in 2009, when Dubai was on the brink of default. Five-year credit default swamps for the emirate declined 10 basis points last week to 205, CMA data show.

The price of a mid-range villa jumped 35 percent in the year to March helped by Dubai’s status as a safe haven amidst political turmoil in the region, according to brokerage Cluttons LLC.

Earnings Forecasts

Emaar climbed 1.8 percent to 5.55 dirhams, the highest close since March 14. The developer of the world’s tallest tower will probably say first-quarter profit rose to 575.8 million dirhams ($157 million) from 511.8 million dirhams in the fourth quarter, according to the mean estimate of five analysts compiled by Bloomberg.

Dubai Islamic Bank jumped 5.3 percent to 2.79 dirhams, the highest level since November 2009. Drake & Scull, a provider of engineering services to the construction industry, surged 7.7 percent, the biggest gain since December 2009, to 90.5 fils.

Abu Dhabi’s ADX General Index (ADSMI) and Saudi Arabia’s Tadawul All Share Index fell 0.3 percent at 2:37 p.m. in Riyadh. Bahrain lost 0.2 percent and Oman’s measure dropped 0.4 percent. Kuwait Stock Exchange Index jumped 1 percent, the most since April 16, and Qatar’s QE Index gained 0.5 percent. Egypt’s benchmark index rose 0.2 percent.

Israel’s TA-25 Index (TA-25) declined 0.7 percent. The yield on the 4.25 percent notes due March 2023 fell five basis points, or 0.05 percentage point, to 3.63 percent.

To contact the reporter on this story: Arif Sharif in Dubai at asharif2@bloomberg.net

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

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