Dubai shares gained the most in 18 months, rebounding from the worst weekly slump since 2011, after the U.S. President put off a military strike against Syria.
The Dubai Financial Market General Index advanced 3 percent, the biggest jump since March 2012, to 2,599.35 at the close in Dubai. The measure slid 6.6 percent last week amid concern a military strike against Syria was imminent and will hurt tourism and investments in the emirate. Emaar Properties PJSC, the developer of the world’s tallest tower in Dubai, gained the most in almost four weeks and Deyaar Development PJSC, a builder of home and office towers, surged 13 percent, before announcing a joint venture for a residential tower.
U.S. President Barack Obama said yesterday he’ll seek authorization from Congress before ordering the strike against Syria for using chemical weapons, delaying action to at least Sept. 9, when congressional leaders return from their recess. Thirty members of U.K. Prime Minister David Cameron’s Conservative Party joined the Labor opposition on Aug. 29 to reject his request to authorize military strikes.
Last week’s decline “was sharper, so in context a rebound of this magnitude is not surprising,” Amer Khan, a director at Shuaa Asset Management, said in an e-mail. The political situation in Syria “has lost the urgency it had prior to the weekend, given the developments in the U.K. and the U.S.”
While Obama said that he’s already decided to take military action, he’ll give lawmakers the opportunity to debate and vote on it. France, which had indicated it would join in taking military action, said it would wait for its parliament before taking action, according to the Associated Press.
The “sharp rebound in the U.A.E. indices was driven once again by domestic retail investors responding to the dissipating threat of Syrian strikes,” Julian Bruce, head of institutional trading at EFG-Hermes U.A.E. Ltd., said by e-mail today.
Dubai Islamic Bank PJSC, the United Arab Emirates’ biggest Shariah-compliant bank, climbed 3.3 percent, the most since Aug. 6, to 3.45 dirhams. Emaar rose 1.7 percent to 5.85 dirhams and Deyaar surged to 54 fils. There are 100 fils to the dirham.
Deyaar said after the market’s closed that its joint venture with Dubai Properties Group will begin sales of homes from a residential tower in the Dubai International Financial Center, home to the regional offices of Citigroup Inc. and Standard Chartered Plc, by mid-September. The tower is 80 percent complete and hand-overs will begin in the second half of 2014, it said in a statement to the Dubai bourse.
Abu Dhabi’s benchmark index gained 1.8 percent, Saudi Arabia’s 1.5 percent, Oman’s measure 0.7 percent and Qatar’s 0.5 percent. Kuwait’s fell 0.1 percent and Bahrain’s was little changed.
Egypt’s EGX 30 Index increased 0.6 percent. Israel’s TA-25 Index gained 0.6 percent as government bonds advanced. The yield on the benchmark 4.25 percent notes due March 2023 declined four basis points, or 0.04 percentage point, to 3.97 percent.
Dubai’s gauge has surged 60 percent this year, the second-most, after Ghana, among more than 90 benchmarks tracked globally by Bloomberg. The gain comes as the economy recovered from the impact of a property crash that was sparked by the global credit crisis.
Last week, Dubai’s index had the biggest weekly slump since March 2011, leaving the gauge at an average price-to-book ratio of 1 compared with 2 in neighboring Saudi Arabia and 1.7 in Qatar.
The drop “was overdone and the market holds stocks that are attractive like in the banking and real-estate sectors,” Nabil Farhat, a partner at Al Fajer Securities, said by e-mail.