Dubai stocks advanced the most in the world as a real estate recovery in the sheikhdom spurred bets companies including Emaar Properties PJSC will post stronger full-year earnings and dividends.
Emaar, developer of the world’s tallest tower, surged to the highest level since October 2009. Emirates NBD PJSC, the biggest United Arab Emirates bank by assets, soared 8.6 percent on volume of more than six times the three-month daily average. The benchmark DFM General Index jumped 1.8 percent to 1,853.17, the strongest since April 2010, at the close in Dubai. The gain was the biggest among 94 global indexes tracked by Bloomberg.
Dubai’s property industry recovered last year after a crash sent prices plunging 65 percent from mid-2008 peaks. Emaar, which has the heaviest weighting on Dubai’s measure, rose 7.4 percent since saying Jan. 27 that a luxury hotel project in central Dubai sold out all units available in the first offering. The developer’s 2012 profit probably rose 16 percent, the average estimate of 11 analysts compiled by Bloomberg shows.
“Long-term investors have returned to the market amid strong economic and earnings fundamentals, particularly for bigger companies such as Emaar and Emirates NBD,” said Dubai-based Waleed Al Khateeb, senior finance manager at Daman Securities LLC. “Sentiment for the real estate sector is strong and investors expect the recovery to continue this year as new projects are announced and the worst is behind us.”
Dubai’s economy may have expanded 5 percent in 2012, the fastest pace since 2007, according to government forecasts. In November, the emirate announced plans to develop a new district with the world’s largest mall, 100 hotels and gardens larger than London’s Hyde Park. The sheikhdom also plans to build five theme parks for $2.7 billion.
Emaar shares surged 3.7 percent to 4.81 dirhams today, while Emirates NBD gained the most since April 2011 to 3.8 dirhams. The bank’s fourth-quarter profit may more than double to 517 million dirhams ($141 million), according to the average estimate of six analysts surveyed by Bloomberg. The stock’s three-day gain of 17 percent is the biggest since October 2007.
“Volumes have improved and foreigners who were put off are coming back in,” Al Khateeb said. “They’re going to be in for a while.”
About 240 million shares traded in Dubai today, compared with a 12-month daily average of 182 million shares. The DFM General Index’s 14-day relative strength index rose to 83 today. A reading above 70 indicates to some analysts that a security or index is poised to decline. The measure was the Gulf Cooperation Council’s best performer last year.