Dubai’s benchmark stock index rose to the highest level in more than three years as investors sought cheap valuations amid an economic recovery in the emirate.
Dubai Islamic Bank PJSC (DIB), the United Arab Emirates’ biggest Shariah-compliant lender, soared 3.1 percent while Emaar Properties PJSC (EMAAR), developer of the world’s tallest skyscraper, gained the most in a week. Dubai’s DFM General Index (DFMGI) climbed 1.9 percent to 2,168.80, the highest since November 2009, at the close in the emirate. The measure has surged 34 percent this year, making it the best-performing index in the Persian Gulf.
“Dubai’s valuations were and are still very undemanding compared to regional markets, and this is particularly apparent in the real estate and the banking sectors,” Amer Khan, a Dubai-based fund manager at Shuaa Asset Management, said in an e-mail today.
Dubai stocks trade at a price-to-book ratio of 0.9 times. That compares with 1.9 times for Saudi Arabia’s Tadawul All Share Index (SASEIDX), the Persian Gulf’s largest bourse. The second- biggest sheikhdom in the U.A.E. is recovering from a property crash and a debt crisis helped by a rebound in the tourism, trade and retail industries. Investor confidence in the emirate has also improved after three state-linked companies paid or refinanced $3.75 billion of debt in 2012.
Dubai’s economy is set to expand 4.6 percent, on average, between 2012 and 2015, more than twice the growth of the previous four years, according to government forecasts. The emirate’s government said today it’s committed to honoring all financial obligations on time after it redeemed 3.3 billion dirhams ($898 million) of bonds due in April.
Dubai Islamic Bank, whose first-quarter profit beat estimates, jumped to 2.99 dirhams, the highest since October 2009. Emaar rose 1.3 percent, the most since April 28, to 5.54 dirhams. Air Arabia PJSC (AIRARABI), the region’s biggest budget airline, surged 5.8 percent to 1.03 dirhams, a three-year high.
Dubai plans to double the number of visitors to 20 million by 2020 and triple annual revenue from the industry to 300 billion dirhams, the government said in an e-mailed statement, citing a tourism plan to build developments and infrastructure.
Elsewhere in the Middle East, Kuwait’s SE Price Index (KWSEIDX) soared 1.6 percent as it gained an 11th day, bringing the rally in 2013 to 30 percent. Abu Dhabi’s gauge increased 0.8 percent, Qatar’s QE Index (DSM) advanced 0.4 percent, Oman’s MSM30 Index (MSM30) rose 0.5 percent and Bahrain’s gauge climbed 0.6 percent. Saudi Arabia’s Tadawul All Share Index fell 0.1 percent. Egypt’s stock market is closed for a holiday.
Israel’s TA-25 Index (TA-25) slipped 0.1 percent. The yield on the government’s benchmark 4.25 percent bonds due 2023 rose 11 basis points, or 0.11 percentage point, to 3.62 percent after Standard & Poor’s lowered the country’s credit rating.
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