Bloomberg News

Dubai Shares Rise on Speculation MSCI-Delay Decline Overdone

June 27, 2011

June 27 (Bloomberg) -- Dubai’s benchmark stock index rose, snapping a three-day drop, on speculation declines prompted by MSCI Inc. delaying a decision to promote the United Arab Emirates to emerging-market status were overdone.

Emaar Properties PJSC, developer of the world’s tallest skyscraper, advanced the most in almost a week and Arabtec Holding Co., the U.A.E.’s biggest construction company by market value, jumped 2.4 percent. The DFM General Index gained 0.3 percent, the most since June 21, to 1,525.61 at the 2 p.m. close in Dubai. Excluding today, the measure lost 2.5 percent this month. The Bloomberg GCC 200 Index of the region’s stocks fell 0.1 percent.

“After MSCI’s announcement, Dubai was hit hard and this is a technical rebound,” said Samer Darwiche, a financial analyst at Gulfmena Investments in Dubai. “Second-quarter results might be a short-term catalyst, but then there’s Ramadan.”

MSCI, whose stock indexes are tracked by investors with about $3 trillion in assets, last week delayed until December its decision on whether to raise the U.A.E. and Qatar to emerging-market status. Introduction of delivery-versus-payment, a program for completing stock transactions, may help lift the U.A.E. from its frontier-market ranking. MSCI’s delay of the decision will allow more time for investors to assess the impact of the changes, the New York-based index provider said.

Trading Volume

A decline of 6.4 percent this year has left the 30 companies in Dubai’s benchmark index valued at about 8.3 times estimated earnings, data compiled by Bloomberg show. That compares with 10.8 times for the MSCI Emerging Markets Index. Companies in the U.A.E. are expected to begin reporting second- quarter earnings next month.

About 83 million shares were traded in Dubai today, compared with a 12-month daily average of 123 million shares. Emaar gained 0.3 percent, the most since June 21, to 3.03 dirhams. Arabtec advanced the most since June 15 to 1.27 dirhams.

During the Islamic holy month of Ramadan, Muslims fast from sunrise to sunset and business activities slow. This year, Ramadan coincides with August.

Qatar’s QE Index climbed 0.5 percent. Oman’s MSM 30 Index dropped 0.9 percent. Kuwait’s SE Price Index and Saudi Arabia’s gauge slipped 0.1 percent. Abu Dhabi’s ADX General Index decreased 0.5 percent and Bahrain’s BB All Share Index declined 0.6 percent.

--Editors: Claudia Maedler, Peter Branton

To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


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