Dubai Shares Climb as Aabar Revives Confidence; Abu Dhabi Rises

Dubai stocks rose, led by Arabtec Holding Co. (ARTC), as state backing for the construction company revived investor confidence in a market that tumbled more than 22 percent last month. Abu Dhabi’s index also advanced.

The DFM General Index (DFMGI) gained for a fourth day, rising 4.4 percent to 4,593.57, the highest close since June 15. Arabtec, the United Arab Emirates’ biggest listed builder, rallied 15 percent to the strongest close in more than two weeks, bringing its advance in the past four days to 55 percent. Union Properties PJSC was the most-traded stock in the gauge, adding 11 percent. Abu Dhabi’s ADX General Index (ADSMI) climbed 1.7 percent.

Khadem Al Qubaisi, the chairman of Abu Dhabi state-run Aabar Investments PJSC, Arabtec’s second-biggest shareholder, said last week at a press conference the company may increase its stake in the builder. Aabar last month cut its holding in Arabtec to about 19 percent from almost 22 percent, stoking speculation the builder was losing government backing. Qubaisi said the sale was “misunderstood” by investors.

“Abu Dhabi being solidly behind the Arabtec story is inspiring confidence in the market,” Saleem Khokhar, the head of equities in Abu Dhabi at NBAD Asset Management Group, which oversees about $2.5 billion, said by telephone. “It’s good to see the market back up where it should be. It’s coming back up to realistic valuations because it had gone down too far.”

Market Volatility

The U.A.E.’s market regulator, the Securities & Commodities Authority, is investigating recent volatility, it said last week. Dubai’s index entered a bear market on June 23, three weeks after the the country’s exchanges, along with Qatar’s, began trading as emerging markets following an MSCI Inc. upgrade. Dubai’s gauge more than doubled almost a year after the upgrade was announced, as investors bet the change would lure investors managing about $8 trillion in assets.

“This volatility in the market is not favoring investors,” Waleed Al Khateeb, Dubai-based senior finance manager at Daman Securities LLC., said by telephone. The market is “too aggressive” at the moment and it has to stabilize at current levels, he said.

The DFM General Index’s estimated price-to-earnings ratio climbed to 19 in May, compared with almost 11 for the MSCI Emerging Markets Index. It closed at 15.4 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. Arabtec, which helped build Dubai’s Burj Khalifa, the world’s tallest skyscraper, tumbled 65 percent from its May 14 peak through to the end of June.

“This Arabtec-led rally is not healthy either,” Al Khateeb said. “It took the market up and brought the market lower and we are facing the same scenario we faced last month.”

Real Estate Boom

Real estate and construction companies have benefited from a rebound in home prices in Dubai, almost six years after the global credit crisis triggered one of the world’s worst property crashes. Prices for mid-range apartments in the the emirate rose 43 percent last year, and a further 5.4 percent so far this year to June, according to Cluttons LLC data compiled by Bloomberg.

Arabtec shares climbed to 4.04 dirhams, the highest close since June 19. The builder, which was at the heart of the Dubai selloff last month, is still up more than 97 percent this year. Union Properties (UPP) jumped to 2.00 dirhams.

Saudi Arabia’s Tadawal All Share Index climbed 0.7 percent to 9,752.16. Qatar’s QE Index (DSM) declined 0.4 percent. The Bahrain Bourse All Share Index retreated 0.1 percent, Kuwait’s SE Price Index fell 0.3 percent and the Muscat Securities Market Index added 0.4 percent. In Egypt, the EGX 30 Index gained 0.8 percent to 8,321.53.

Israel’s benchmark TA-25 Index (TA-25) closed little changed at 1,391.90. Delek Group Ltd. traded 0.9 percent lower after saying it reached a non-binding understanding to sell a 47 percent stake in Phoenix Holdings Ltd. to Kushner Funding for 1.7 billion shekels ($497.5 million). Phoenix shares added 1.7 percent.

The yield on Israel’s benchmark bond due March 2024 dropped one basis point, or 0.01 of a percentage point, to 2.89 percent.

To contact the reporter on this story: Sarmad Khan in Dubai at skhan170@bloomberg.net

To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net Dana El Baltaji

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