Abu Dhabi’s benchmark share index rose to the highest level in two weeks as a drop in bond yields prompted investors to seek returns in the stock market.
Sorouh Real Estate Co., a developer in merger talks with Aldar Properties PJSC, advanced to the highest since April. Aldar gained for a fourth day. The ADX General Index climbed 0.2 percent to 2,592.64, the highest since Aug. 26, at the close in the emirate. Qatar’s gauge rose 0.2 percent, while the Bloomberg GCC 200 Index fell 0.2 percent.
The yield on Abu Dhabi’s 6.75 percent dollar bonds due April 2019 fell two basis points, or 0.02 percentage point, to 2.3 percent. The yield is down 100 basis points this year as the credit outlook of the emirate that holds about 7 percent of the world’s oil reserves improved. The ADX General Index offers a dividend yield of 4.76 percent, the highest in the Gulf Cooperation Council, according to data compiled by Bloomberg.
“Bond yields are making stocks more attractive,” said Talal Touqan, head of research at Al Ramz Securities LLC in Abu Dhabi. “Confidence is getting back to the market. We still need higher liquidity to confirm the trend."
About 67 million shares traded today in Abu Dhabi, compared with a daily average of about 150 million shares in 2009, data compiled by Bloomberg show.
Sorouh gained 1.7 percent to 1.20 dirhams, the highest close since April 10. Aldar rose 0.8 percent to 1.25 dirhams, the highest since Aug. 26.
The cost of insuring Abu Dhabi’s debt for five years has declined 23 basis points this year to 105 on Sept. 7, according to data provider CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market. The average yield on debt in the six-nation GCC tumbled to a record 3.67 percent on Sept. 7, according to the HSBC/NASDAQ Dubai GCC US Dollar Sukuk/Bond Index.
Dubai’s DFM General Index fell 0.9 percent, Kuwait’s measure dropped 0.6 percent and Saudi Arabia’s Tadawul All Share Index slid 0.3 percent. Bahrain’s gauge climbed 0.2 percent, while Oman’s measure closed little changed.