Dubai Financial Market climbed the most in more than a year as the emirate’s economic recovery spurs investor expectations for initial public offerings on the bourse.
The shares jumped 8.7 percent, the biggest gain since March 2012, to 1.63 dirhams at the close in the emirate, bringing the gain this month to 30 percent. The stock was the most active on the benchmark DFM General Index, which rose 1.2 percent. About 107 million shares were traded, or 5.4 times the three-month daily average.
The bourse’s net income is poised to more than triple in 2013, according to the mean of four analyst estimates compiled by Bloomberg. Dubai’s economy is set to expand by 4.6 percent on average through 2015, according to government forecasts, as it benefits from Dubai’s plans to sell stakes in its companies to the public.
“Investors have been buying into increasing volumes and potential new IPOs,” said Jaap Meijer, a director of equity research at Dubai-based Arqaam Capital Ltd. The regulator’s revenues are benefiting from “the strong interest from retail and institutional investors, domestic and foreign.”
“Many companies” that fall under the umbrella of Investment Corp. of Dubai, the emirate’s main state-owned holding company known as ICD, would be candidates for IPOs, Sheikh Ahmed bin Saeed Al Maktoum, head of the emirate’s Supreme Fiscal Committee, said in a May 7 interview with Bloomberg this month.
Trading volumes, which contribute to the exchange’s revenue, reached a daily average of 338 million shares this year, more than double 2012 levels.
Investor confidence in the emirate, which was on the brink of defaulting in 2009, has improved after three state-linked companies paid or refinanced $3.75 billion of debt in 2012. Dubai Group LLC, an investment company owned by the emirate’s ruler, agreed this month on final terms with its main creditors to restructure $6 billion.
Investors have piled into Dubai stocks, helping the measure rally 46 percent this year, the world’s third-best performer among 94 indexes tracked by Bloomberg. DFM shares have rallied 60 percent this year. Five analysts recommend investors sell the shares, according to data compiled by Bloomberg.