Dubai’s benchmark stock index surged the most in more than a month after the emirate won the right to host the World Expo 2020.
The DFM General Index advanced 1.6 percent, the most since Oct. 20, to 2,945.91 at the close, bringing the gain for the year to 82 percent. The measure soared as much as 4.2 percent during intraday trading. Dubai Investments PJSC, which holds stakes in more than 40 businesses, increased to the highest in five years and Union Properties PJSC, rose for a second day. Abu Dhabi’s gauge added 0.3 percent.
Dubai, which teetered on the brink of default in 2009, will invest almost 6 billion euros ($8.1 billion) on infrastructure projects ahead of the Expo, Sheikh Ahmed bin Saeed Al Maktoum, head of Dubai’s Supreme Fiscal Committee and chairman of Emirates airline, said Nov. 17. HSBC Holdings Plc estimates government and private expenditure will reach 67 billion dirhams ($18.2 billion) in the run up to the Expo.
“That catalyst has been realized,” Digvijay Singh, head of Middle East equity strategy at VTB Capital in Dubai, said by phone. There could be some selling pressure next week as investors look to book profits, he said.
Dubai beat Turkey’s Izmir, Russia’s Ekaterinburg and Brazil’s Sao Paulo in a vote organized by the Bureau International des Expositions in Paris. The emirate, whose economy is rebounding as its hospitality and property industries flourish, plans to attract 25 million visitors during the six-month event starting Oct. 20, 2020.
Dubai’s economy may grow 6.4 percent on average over the next three years and potentially 10.5 percent annually to 2020, Barclays Plc said in a Nov. 26 report. Bank of America Corp. said in September the Expo may boost GDP by 0.5 percentage point annually and 2 percentage points in 2020.
The yield on Dubai’s 5.591 percent bond maturing in June 2021 declined three basis points, or 0.03 percentage point, to 4.23 percent at 6 p.m. in the emirate.
Shares valued at 1.5 billion dirhams traded in Dubai today compared with a one-year average of 562 million dirhams.
Dubai Investments gained 3.5 percent to 2.38 dirhams and Union Properties, the emirate’s smallest publicly traded developer, rose 2.6 percent to 97.5 fils. The shares were the most traded on Dubai’s benchmark index as both companies have assets close to the site that will be developed for the Expo, said Talal Touqan, the head of research at Abu Dhabi-based Al Ramz Securities.
The Expo will held on 438 hectares close to the new Al Maktoum International Airport that’s equidistant from Abu Dhabi, the capital of United Arab Emirates, and central Dubai.