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Dubai Stocks Re-Enter Bull Market Three Weeks After Bear Selloff

Dubai stocks rose, sending the benchmark index back into a bull market three weeks after a selloff ended the longest rally since 2005, as investors bet Arabtec (ARTC) Holding Co. will keep state backing.

The DFM General Index (DFMGI) climbed 3.4 percent to 4,765.64 at the close, the best performer among more than 90 gauges tracked globally by Bloomberg and bringing its increase since a low on June 30 to 21 percent. Arabtec, the biggest builder in the United Arab Emirates, surged 14 percent as volume climbed to 2.5 times the three-month daily average. The stock, which rose the most on the DFM, has rallied 86 percent this month.

Arabtec has reversed the slide that sent Dubai’s gauge tumbling into a bear market on June 23 as concern eased that Aabar Investments PJSC, Arabtec’s second-biggest shareholder, would divest its stake. The stock is up 69 percent since Khadem Al Qubaisi, who chairs both Arabtec and Aabar, said July 2 the Abu Dhabi government-owned company may rebuild its holding in the Dubai-based builder.

Investors see “a light at the end of the tunnel” and expect Abu Dhabi to continue backing Arabtec, Saleem Khokhar, head of equities at NBAD Asset Management Group, which oversees about $2.5 billion, said by phone from Abu Dhabi today. “Second-quarter earnings for the U.A.E. companies should be in line in terms of expectations and I think they will deliver.”

Earnings Outlook

Arabtec, whose 2013 profit almost tripled, will report “positive” earnings this month, Qubaisi said July 2. The builder’s shares dropped from a peak of 7.40 dirhams in May to 2.61 dirhams at the end of June as Aabar reduced its stake, Chief Executive Officer Hassan Ismaik resigned and the builder dismissed staff. The stock closed at 4.86 dirhams today.

Shares of Emaar Properties PJSC (EMAAR) climbed 1.8 percent. The developer of the world’s tallest tower in Dubai may post a 40 percent increase in second-quarter profit to 945 million dirhams ($257 million), according to an estimate from NBK Capital compiled by Bloomberg.

Shuaa Capital PSC (SHUAA), the investment bank controlled by Dubai’s ruler, jumped 7.4 percent after reporting a first-half profit of 14.4 million dirhams, compared with a loss in the same period last year.

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 Daliah Merzaban, Stephen Kirkland

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