Dubai shares rose the most in the world amid growing speculation the selloff that wiped off almost a quarter of the benchmark index’s value has run its course.
The DFM General Index advanced a second day, jumping 7.9 percent, the most since Sept. 10, to 4,389.94 at the close in the emirate. It’s the best performer among more than 90 gauges tracked globally by Bloomberg so far today. Arabtec Holding Co., the United Arab Emirates’ biggest listed builder, advanced 15 percent, the most since April 2012. Emaar Properties PJSC (EMAAR) added 5.1 percent.
“The selling has started to look like it is capitulating,” Akber Naqvi, an executive director at Dubai-based Al Masah Capital Ltd., which manages $545 million, said in e-mailed comments. “The market is at attractive levels and needs consolidation and sideways movement to confirm the bottom, but buyers seem to be more assertive at these levels.”
The U.A.E. Securities & Commodities Authority is investigating market volatility in June after Dubai’s index entered a bear market last week, it said in an e-mailed statement to Bloomberg today. The regulator will take “suitable legal action” and put in place “preventive measures” following the probe. The index slid 22 percent in June, the biggest monthly drop since November 2008. Abu Dhabi’s ADX General Index (ADSMI) declined 13 percent during the period.
Arabtec was at the heart of Dubai’s selloff last month, as Aabar Investments PJSC, the company’s second-biggest shareholder, cut its stake, the chief executive officer resigned and the builder dismissed staff. Arabtec shares climbed to 3.31 dirhams. Emaar’s advanced to 9.35 dirhams, the highest close since June 19.
Aabar is now studying whether to rebuild its holding in Arabtec, Khadem Al Qubaisi, who is chairman of both companies, said at a press conference today.
The U.A.E.’s central bank on June 8 warned that the country’s real estate market may be overheating, spurring the index’s first quarterly retreat since the three months ended June 2012. The gauge’s 14-day relative-strength index rose to 47 today from a low of about 28 on June 24. A reading below 30 indicates to some technical analysts that an asset is oversold and poised to reverse.
Dubai stocks rose yesterday, erasing a loss of more than 5 percent to close 3.2 percent higher as Amlak Finance PJSC (AMLAK), a mortgage lender 45 percent owned by Emaar, said it proposed a new restructuring plan to creditors on June 5. If approved, the plan could end years of negotiations on about $2.7 billion of debt. The debt negotiations are among the last to be resolved by the emirate after Dubai Group LLC, an investment company owned by the sheikhdom’s ruler, completed a $6 billion deal with lenders in January.
The DFM General Index (DFMGI) has gained more than 11 percent in last two trading days, with 12 stocks having advanced 10 percent or more at the close today. Volumes spiked with about 1.4 billion shares traded, 85 percent higher than the 739 million 12-month daily average. Almost 1.1 billion shares changed hands yesterday.
“The market has found a bottom,” Hisham Khairy, the Dubai-based head of institutional trade at Mena Corp. Financial Services LLC, said by telephone. Sentiment is improving and the market “should target the 4,700 level from here,” he said.
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