U.A.E. Shares Rally to 5-Year High on Earnings; Saudi Climbs

United Arab Emirates stock indexes rallied to the highest levels in almost five years on bets the economic recovery will spur company earnings. Saudi Arabian shares rose after Saudi Basic Industries Corp. reported results.

Dubai’s benchmark DFM General Index (DSM) gained 1.8 percent to 2,541.52, the strongest since November 2008, at the close in the emirate, as Dubai Investments PJSC (DIC) jumped 6.1 percent, taking its three-day advance to 16 percent. Abu Dhabi’s ADX General Index (MSM30) increased for an 11th day, its longest stretch of gains in two months, climbing 0.9 percent to 3,857.52, the highest since September 2008.

Dubai’s economy, which is recovering after a property market crash, is set to grow 4.6 percent, on average, between 2012 and 2015, more than twice as fast as in the prior four years, government forecasts show. Tamweel PJSC (TAMWEEL), a mortgage provider based in the emirate, jumped 3.6 percent to 1.16 dirhams, the highest close in a month, after reporting a 40 percent increase in second-quarter profit.

“The strength we’ve seen over the last three quarters clearly indicates strong expectations for earnings to improve, and growing bottom lines are a validation of market strength thus far,” said Amer Khan, a Dubai-based director at Shuaa Asset Management. The rally “points to how confident investors are in the prospects for the U.A.E. economy to continue recovering and growing,” he said.

The DFM and ADX are among the world’s top-five best-performing indexes this year, according to data compiled by Bloomberg. Shares of Dubai Financial Market (DFM), which have more than doubled this year, rallied 4.6 percent today before the company reported an almost seven-fold increase in quarterly profit after market hours.

Sabic Results

Saudi Arabia’s Tadawul All Share Index advanced for the first time in three days, gaining 1 percent to 7,740.46 after Sabic, the world’s largest petrochemicals company by market value, said it was studying investment opportunities in the U.S. as the economic slowdown in Europe and China hurt its second-quarter sales. The stock advanced 1.4 percent, the most since May 21, to 93.50 riyals.

“Numbers are weaker than estimates, though, given affiliates also failed to meet estimates, this miss is expected,” Sriharsha Pappu, a Dubai-based analyst at HSBC Holdings Plc, said by phone. Pappu, who has a buy rating on the shares, said analysts estimated Sabic (SABIC)’s earnings before the company’s units reported results. “We’re looking for better third-quarter results. This quarter is mostly down to pricing.”

Elsewhere in the Middle East, Egypt’s benchmark EGX 30 Index rose 1.4 percent, the most since July 9, as the nation’s interim cabinet convenes for the first time today.

Oman’s MSM30 Index increased 0.2 percent and Kuwait’s gauge climbed 0.6 percent. Qatar’s QE Index fell 0.1 percent and Bahrain’s measure lost 0.3 percent. In Israel, the benchmark TA-25 Index (TA-25) decreased 0.1 percent at 3:33 p.m. in Tel Aviv, while the yield on the benchmark 4.25 percent bonds due in March 2023 declined three basis points to 3.68 percent.

To contact the reporter on this story: Sherine El Madany in Dubai at selmadany@bloomberg.net

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

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