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DUBAI - Dubai's share Index rebounded for the first time in three days of trading, and Abu Dhabi shares posted their biggest gains since March, as investors shrugged off last week's sell-off as overdone and analysts said the impact of Dubai's debt problems would
be limited. Shares in Emirates Telecom Corp., or Etisalat, the biggest telecoms operator in the UAE, soared the most in more than eight months. Stocks in Aldar Properties and Sorouh Real Estate Co., the two largest developers in Abu Dhabi, gained after they were rated “buy” in new coverage at HC Securities.
Abu Dhabi’s Index climbed 3.9 per cent, the most since March 24, to 2,673.12. The Index had tumbled 12 per cent last week. Dubai’s DFM General Index added 1.2 per cent after retreating 13 per cent last week.
“The market did not expect this quick a recovery in Dubai. This shows that many investors are now convinced the media campaign (about Dubai’s debts) was exaggerated,” said Al Fajr Securities financial Analyst Humam Al Shamaa.
Dealers said the market was responding to reassuring statements by the government and other officials about Dubai World’s request for a delay in payments on $26 billion of its debt. Minister of Economy Sultan bin Saeed Al Mansouri said last week that efforts by Dubai World to tackle its debts are on the right track.
World Bank President Robert Zoellick said on Saturday that Dubai’s debt workout will be largely contained to the emirate and a handful of large creditors and would have limited repercussions for debt markets beyond the Gulf. “I personally think that the Dubai financial problems will be contained and manageable,” he said.
Financial and property stocks slumped last week after Dubai World requested a “standstill” agreement on its debt payments. Nakheel World, the property unit of Dubai World, has a $3.52 billion bond maturing on
December 14.
“We’re seeing a lot of decoupling today of affected companies from non-affected,” said Mohammed Ali Yasin, managing director of Dubai-based Shuaa Securities. “Some lower prices are tempting investors to pump Liquidity back into the market.” Dubai “is still a very volatile market” and will remain so at least until the Nakheel bond comes due “because people are going to be holding hope for an announcement,” Yasin said.
Etisalat climbed 5.8 per cent to Dh10.95, its biggest one-day Gain since March. Gulfmena Alternative Investments said last week that the stock was attractive after falling to its lowest level since August. Aldar added 1.8 per cent to Dh4.55, the highest level in a week. HC assigned Aldar stock a price estimate of Dh6.20. Sorouh surged by 4.8 per cent, its biggest Gain since November 2, to Dh2.64. HC estimated the shares would trade at Dh3.20.
Shares of Dubai’s giant property developer Emaar, which led the losers last week, increased by 3.5 per cent in morning trade. But it later went into the red, dropping by nearly three per cent at midday before reversing course again and closing 3.55 per cent up.
“There are those who are trying to make a quick Profit ... We saw offers to sell after the surge in Dubai. This is to avoid losses,” said Shamaa, explaining the fluctuation in Emaar’s share price. “The market is stronger and confidence is returning to it,” he said.
All Dubai’s indices for trading sectors were in the green at opening, except for banking which was down more than 1.4 per cent. But by midday, banks had dropped further by over 2.4 per cent, while real estate went 2.7 per cent into the red. Only banks stayed in the red at the close, down 1.56 per cent.
In Abu Dhabi, the indices rose in all sectors on Sunday. “Abu Dhabi has passed the difficult stage... Dubai may still face a state of uncertainty,” Shamaa said. “It seems that foreign investors, who were the main reason for the drop in Abu Dhabi, have withdrawn their offers to sell,” he added.
business@khaleejtimes.com
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