Dubai Stocks Jump as Valuations Lure Institutional Investors

  • Benchmark index rises 3rd day, longest win-streak in 2 months
  • Gauge's Forward P/E ratio is at lowest in almost 3 years

Dubai stocks rallied as the lowest valuations in nearly three years lured institutional investors after a selloff earlier this month.

The DFM General Index gained 2.3 percent to close at 2,985.85, the biggest jump in almost a month. Emaar Properties PJSC, the developer of the world’s tallest building in Dubai, led the increase as it rose the most in six weeks. Stocks on the gauge are trading at the cheapest compared with expected earnings since January 2013, according to data compiled by Bloomberg.

“This is a great market for value investors," said Nabil Farhat, an Abu Dhabi-based partner at Al Fajr Securities. “I have been buying every day in the last 10 days. Institutional investors find the current prices attractive. A lot of stocks offer discounts to average target prices.”

Dubai led a rebound across most markets in the six-nation Gulf Cooperation Council. Equities in the region have tumbled this year as oil, which generates the bulk of government revenue, plunged to the lowest in seven years. The GCC is home to about 30 percent of the world’s proven crude reserves.

Emaar added 3.8 percent as the gauge’s 14-day relative-strength index rose above 30 for first time in a week. A level below 30 suggest to some technical analysts that a security may be oversold and poised to rebound.

About 285 million shares changed hands in the emirate, compared with a 12-month daily average of more than 400 million. Stocks on the benchmark measure closed at 9.6 times 12-month forward earnings, down from a record 19.5 times in May last year.

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