Dubai Index Rises to Three-Year High on Emaar, Property Outlook
Dubai’s benchmark stock index rose to the highest level in almost three years led by Emaar Properties PJSC (EMAAR) 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 said it started the development of a residential project in Dubai, surged to the highest level since 2009. Union Properties PJSC (UPP), another Dubai-based developer, soared 6.3 percent. The benchmark DFM General Index (DFMGI) jumped 1 percent to 1,791.73, the highest level since April 2010, at the close in the emirate. About 551 million shares were traded today, triple the 12-month daily average.
The Emaar news “sent a positive wave across real estate companies on the DFM,” said Samer Darwiche, Dubai-based analyst at Gulfmena Investments Ltd. “If Emaar is re-launching projects, it means there is demand on real estate and thus other companies should be doing the same.”
Dubai’s property market is recovering as the emirate’s tourism, hotel and restaurant industries grew last year after a 2008 crash sent home prices tumbling more than 65 percent. The emirate’s economy may have expanded 5 percent in 2012, the fastest pace since 2007, according to government forecasts. Positive trends in the property sector are set to continue in 2013, Shuaa Capital PSC (SHUAA) said in an e-mailed note today, raising Emaar’s price estimate 23 percent to 4.94 dirhams.
Emaar, which has the heaviest weighting on Dubai’s index, said yesterday it started developing the Address Residence Fountain Views in Dubai, which comprises 280 apartments. The company may post a 15 percent increase in 2012 net income, according to the average estimate of 11 analysts compiled by Bloomberg. The shares rose 4.1 percent to 4.30 dirhams, the highest level since November 2009.
Union Properties gained to 47 fils, the highest level since April 12. The company is poised to return to profit in 2012, according to an EFG-Hermes Holding SAE estimate compiled by Bloomberg.
The DFM General Index’s 14-day relative strength index rose to 81 today. A reading above 70 indicates to some analysts that a security or index is poised to decline. The measure was the Gulf Cooperation Council’s best-performer last year with a gain of 20 percent.
In North Africa, Egypt’s benchmark EGX 30 Index increased 0.4 percent at the close in Cairo after Orascom Construction Industries, the country’s biggest publicly traded company, said investors led by Bill Gates will buy a stake. Orascom, which rose 1.9 percent today, said it will consolidate its Cairo and London-traded shares into a listing on the NYSE Euronext Amsterdam, backed by $2 billion of investments to fund purchases of Cairo stock at 280 Egyptian pounds a share.
“The news is positive for the company but negative for the market,” Mohamed Radwan, head of international sales at Pharos Holding in Cairo, said by phone. “For the short term, I doubt today’s gains will be sustained. At the rate things are going, Egypt is definitely not at the top of the list for Middle East and North Africa fund managers.” Orascom accounts for 24.9 percent of the EGX 30, according to data compiled by Bloomberg.
Elsewhere in the Middle East, Abu Dhabi’s ADX General Index (ADSMI) gained 0.6 percent and Kuwait’s gauge advanced 0.3 percent. Oman’s MSM30 Index and Saudi Arabia’s Tadawul All Share Index (SASEIDX) increased 0.1 percent while the Bloomberg GCC 200 Index (BGCC200) of the biggest companies in the Gulf and Qatar’s QE Index (DSM) were little changed. Bahrain’s measure slipped 0.1 percent.
Israel’s TA-25 Index (TA-25) dropped 1.5 percent at the close in Tel Aviv. The yield on the government’s benchmark 4.25 percent bonds due 2023 rose three basis points, or 0.03 percentage point, to 4.06 percent.
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