Dubai’s benchmark stock index rallied to the highest level in more than three years led by Emaar Properties PJSC on investor optimism a real estate recovery in the emirate is set to continue this year.
Emaar, the developer of the world’s tallest skyscraper which had its price estimate raised at HSBC Holdings Plc, surged 5.7 percent. Emirates NBD PJSC, the United Arab Emirates’ biggest lender by assets, rose the most this month. The benchmark DFM General Index jumped 2.2 percent to 1,899.51, the highest level since November 2009, at the close in Dubai.
“Real estate stability is enough to see a continued equity rally in the country,” said Saad al Chalabi, a senior institutional trader at Al Ramz Securities in Abu Dhabi. “Most stocks on the bourse are under book value” with some trading at strong multiples compared with other markets in the six-nation Gulf Cooperation Council, he added.
Dubai stocks gained 16 percent in January, their best start to a year since the exchange started operations in 2000, according to data compiled by Bloomberg and the bourse. The city’s property market is recovering as tourism, hotel and restaurant industries grew after a 2008 crash sent home prices tumbling more than 65 percent. The economy may have expanded 5 percent in 2012, the fastest pace since 2007, the government forecasts.
Dubai shares have a price-to-book value of 0.8 times, compared with 1.8 times for stocks on Saudi Arabia’s Tadawul All Share Index, the Persian Gulf’s largest bourse. The measure’s 31 companies trade at a 2013 estimated price-to-earnings ratio of 10.7 times, compared with 11.3 times for Saudi shares.
Emaar surged to 5.01 dirhams, the highest close since November 2008. Dubai’s economic and real estate recovery will probably boost the price to 6 dirhams as apartment sales pick up amid increasing demand, HSBC said last week. Positive trends in Dubai’s property sector are set to continue in 2013, helping Emaar’s performance, Shuaa Capital PSC said in January.
The DFM General Index’s 14-day relative strength index jumped to 75 today from 70 at the close last week. A reading above that level indicates to some analysts that a security or index is poised to decline. About 206 million shares were traded today, compared with a 12-month daily average of 184 million shares. The measure was the GCC’s best-performer last year with a gain of 20 percent. Emirates NBD added 1.6 percent to 3.76 dirhams today.
Elsewhere in the Middle East, Saudi Arabia’s Tadawul All Share Index advanced 0.2 percent to 7,012.17, the highest close since Feb. 4. The world’s biggest oil exporter may allow foreigners to invest directly in stocks in the next year, John Burbank, founder of $3.7 billion San Francisco-based hedge fund Passport Capital LLC, said in an interview with Bloomberg Television last week.
“The place that we probably have by far the biggest weight relative to other people would be Saudi Arabia, which is our favorite emerging market,” Burbank said. Passport has about 17 percent of its capital invested in the Arab world’s largest bourse. The kingdom allows non-resident foreigners to invest in shares through equity swaps and exchange-traded funds.
Oman’s MSM30 Index rose 0.2 percent, while Kuwait’s gauge and Qatar’s QE Index gained 0.1 percent. Abu Dhabi’s ADX General Index slipped 0.5 percent after rising 0.9 percent last week, its eighth week of gains. Bahrain’s measure declined 0.2 percent and the Bloomberg GCC 200 Index of the biggest companies in the Persian Gulf slipped less than 0.1 percent. In North Africa, Egypt’s benchmark EGX 30 Index increased 0.2 percent.
Israel’s TA-25 Index advanced 0.2 percent at the close in Tel Aviv. The yield on the government’s benchmark 4.25 percent bonds due 2023 fell one basis point, or 0.01 percentage point, to 4.06 percent.