Emaar Properties PJSC jumped the most in a month after the Middle East’s second-biggest developer by market value followed Emirates NBD PJSC in posting profit that beat estimates, boosting confidence in Dubai’s recovery.
Emaar, developer of the world’s tallest tower, gained 2.8 percent to 5.90 dirhams at the close Dubai as volume jumped to 23 million shares, 43 percent above the three-month daily average. Emirates NBD rallied 4.7 percent, taking its increase to 11 percent since the largest bank in the United Arab Emirates reported earnings on July 22. The benchmark DFM General Index rose 2 percent, bringing the 2013 gain to 58 percent, the most after Ghana’s index among 93 benchmarks tracked by Bloomberg.
“Investors seem to have some level of certainty about Dubai’s improving economy and fundamentals,” Amer Khan, a Dubai-based director at Shuaa Asset Management, said by e-mail today. “No other stocks were perhaps a better gauge of that uncertainty discount than Emaar and Emirates NBD.”
Emaar yesterday said second-quarter net income was 675 million dirhams ($184 million), surpassing the 529 million-dirham average estimate of six analysts. The company, which operates Dubai Mall, the world’s largest by area, said shopping centres and hospitality contributed 45 percent to first-half revenue as visitors to the mall surged 23 percent to 38 million.
Property sales in Dubai also jumped to 6.3 billion dirhams in the first half from 1.6 billion in the year-earlier period, the company said. The sheikhdom, one of seven that make up the U.A.E., suffered one of the world’s worst real estate crashes after the 2008 global credit crisis.
Emirates NBD, which faced an increase in bad loans during the crash, said July 22 its second-quarter profit surged 50 percent as the non-performing loans ratio fell to 13.9 percent in June from 14.3 percent in December. The lender’s shares trade at 10.2 times estimated earnings after soaring 87 percent this year, compared with 12.1 times for the Bloomberg GCC 200 Financial Index.
“You’ve had solid earnings justifying the rally,” Khan said. “With expectations of further improvement and valuations still below book, its very possible that there is further upside.”