Dubai’s stock index surged the most since December 2009 after President Barack Obama said the U.S. would put a strike on Syria on hold if the nation followed through on a proposal to surrender its chemical weapons.
The DFM General Index (DFMGI) climbed 8.5 percent, the biggest gainer among 94 gauges monitored by Bloomberg globally, to 2,522.15 at the close in Dubai. Before today, the measure had plunged 15 percent from a five-year high on Aug. 25. Emaar Properties PJSC (EMAAR), the stock with the biggest weighting on the index, soared 8.5 percent, while discount carrier Air Arabia PJSC (AIRARABI) jumped 10 percent. Abu Dhabi’s measure gained 5.5 percent and Qatar’s 4.9 percent.
Dubai’s stocks posted the biggest swings in the world in the past month on concern a military strike against Syria would have repercussions in the oil-rich Middle East. Shares rose after a Russia-backed proposal for Syria to surrender its chemical weapons. While questioning whether Syrian President Bashar al-Assad would yield control of his weapons, Obama said on ABC News that an attack would “absolutely” be put on hold if Syria followed through.
“Investors are relieved that it looks like the military strike will be postponed, and it’s a rebound from the last six or seven-day drop,” Tariq Qaqish, a director at Dubai-based fund manager Al Mal Capital PSC, said by phone. “Things on the ground in the region are still positive, especially in the GCC. Economies have moved on thanks to infrastructure spending, and higher oil revenues and prices.”
The Middle East accounted for about 35 percent of global crude production in the first quarter of this year, according to the International Energy Agency. Oil prices have averaged $97.60 dollar a barrel this year, compared with $94.15 in 2012.
The Dubai index’s 30-day volatility, a measure of fluctuations in Dubai’s equities gauge, rose to 42 today, the highest since January 2010 and the most among 72 indexes tracked by Bloomberg. That’s more than 10 points above Japan.
The gauge has climbed 55 percent this year, more than any of the 50 largest equity markets, as the Persian Gulf business hub recovers from the global credit crisis that led to a crash in property prices. Economic growth is set to accelerate to 4.6 percent, on average, through 2015 helped by a rebound in tourism, trade and transport, government estimates show. That’s more than twice as fast as the prior four years.
The yield on Dubai’s 5.591 percent bonds declined seven basis points, or 0.07 of a percentage point, to 4.83 percent, the lowest in two weeks at 4:33 p.m. in the emirate. Dubai’s credit default swaps, or the cost to protect the sheikhdom’s debt against default, fell five basis points to 225, according to CMA data.
The value of shares traded in the emirate climbed to 1.35 billion dirhams ($368 million) compared with a daily average this year of 529 million dirhams. Emaar gained the most since March 2011 to 5.75 dirhams and Air Arabia soared the most since December 2009 to 1.31 dirhams.
Shares across the six-nation Gulf Cooperation Council rallied, with the Bloomberg GCC200 Index advancing 3.3 percent, the most since March 2011. Saudi Arabia and Kuwait’s measures climbed 2.9 percent, Oman’s rose 2.6 percent and Bahrain’s 0.4 percent.
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