Dubai Shares Climb to Five-Week High Amid Arabtec Stake Bets

Dubai’s stocks rose to the highest level in more than five weeks after yesterday entering a bull market amid bets Arabtec Holding Co.’s second-biggest shareholder will rebuild its stake in the construction company.

The benchmark DFM General Index (DFMGI) jumped 1.9 percent to 4,858.29 at the close in the emirate, the strongest level since June 8. The gauge yesterday advanced 21 percent from a low reached on June 30, just 22 days after entering bear-market territory. Arabtec, the United Arab Emirates’ biggest publicly traded builder, added 1.9 percent to 4.95 dirhams, taking a rally this month to 90 percent and making it the best-performer on the MSCI Emerging Markets Index.

Dubai’s equities sank 22 percent in June, the steepest retreat in almost six years, after Abu Dhabi-owned Aabar Investments PJSC cut its stake in Arabtec to about 19 percent from 21.57 percent. The gauge this month recouped the losses with a 23 percent gain after Arabtec (ARTC) Chairman Khadem Al Qubaisi said July 2 Aabar may restore its holding. Arabtec extended its rally today as a person familiar with the matter said Aabar will boost its stake to more than 30 percent.

“This is positive news for investors as it shows that Aabar is standing by their word of increasing their stake,” Ramez Merhi, director of asset management at Dubai-based Al Masah Capital, which manages $545 million, said by e-mail.

Staff Dismissal

Aabar, which has investments in the real estate, aviation and energy industries, is in talks to buy at least half of former Arabtec Chief Executive Officer Hasan Ismaik’s 28.85 percent stake, the person said, asking not to be identified as the plan is private.

Dubai-based Arabtec’s shares dropped from a peak of 7.40 dirhams in May to 2.61 dirhams on June 30 as Ismaik resigned and the builder dismissed staff.

The selloff in Dubai’s stocks last month, triggered in part by Arabtec and the central bank’s warning that the U.A.E. property market may be overheating, was a correction and not a “true bear,” according to Ahmed Shehada, head of advisory and institutions at NBAD Securities LLC, the U.A.E.’s fourth-biggest brokerage by trading volume. “After one and a half years of rising, you might expect the market to take a breather once in a while” and gains will resume, Shehada said.

Best Performer

The sheikhdom’s benchmark gauge has almost tripled in the past 18 months, making it the best-performer among 93 global equity indexes tracked by Bloomberg.

Dubai Investments PJSC (DIC) led today’s advances, jumping 5 percent to 3.6 dirhams, the highest close since mid-May. Shares of Dubai Financial Market PJSC (DFM), the only publicly traded bourse in the Persian Gulf, rallied 5.5 percent to 3.64 dirhams, the strongest level in more than three weeks.

Abu Dhabi’s benchmark ADX General Index (ADSMI) added 1.2 percent, led by First Gulf Bank PJSC, which rose to the highest level since June 1. Stock markets in Qatar and Bahrain gained at least 0.5 percent, while Oman’s MSM 30 Index climbed 0.4 percent. Kuwait’s SE Price Index (KWSEIDX) and Saudi Arabia’s Tadawul All Share Index advanced 0.1 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, James Doran

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