Bloomberg News

Dubai Shares Rise 2nd Day This Week on Bets Drop Overdone, Oil

September 20, 2011

Sept. 20 (Bloomberg) -- Dubai’s benchmark stock index advanced for a second day this week on bets a decline the past two months was overdone on prospects for earnings and after crude oil climbed.

Emaar Properties PJSC, developer of the world’s tallest skyscraper, rose for the first time in three days. Arabtec Holding Co., the United Arab Emirates’ biggest construction company by market value, gained 0.7 percent. The DFM General Index added 0.2 percent to 1,466.08 at the 2 p.m. close in Dubai, paring its loss in the past two months to 3.9 percent. About 60 million shares traded in Dubai today, compared with a 12-month daily average of 121 million shares. The Bloomberg GCC 200 Index of the region’s stocks increased 0.2 percent.

“There is no liquidity and that has nothing to do with company fundamentals as we are undervalued and oversold,” said Mohammed Ali Yasin, chief investment officer for CAPM Investment PJSC in Abu Dhabi. “The lack of volatility has helped make the downturn in local shares less steep than elsewhere, as international investors are staying away.”

A decline of 10 percent this year prompted by concern over Europe’s mounting sovereign-debt crisis has left the 31 companies in Dubai’s benchmark index valued at about 8.4 times estimated earnings, data compiled by Bloomberg show. That compares with 10 times for the MSCI Emerging Markets Index, which is down 17 percent this year. Dubai’s measure is valued at about 0.7 times net assets, or book value, while emerging markets stocks are valued at 1.6 times.

‘Productive’ Talks

European stocks climbed as Greece described its debt talks with the European Union and the International Monetary Fund as “productive” and investors speculated the Federal Reserve will provide more stimulus. U.S. futures rose 0.5 percent at 8:36 a.m. in New York and the Stoxx Europe 600 Index rallied 1 percent.

Oil for October delivery jumped as much as 1.4 percent to $86.91 a barrel on the New York Mercantile Exchange. Gulf Arab oil exporters, including the U.A.E. and Saudi Arabia, supply about a fifth of the world’s oil.

“Even day traders are finding there is no point in trading because they’re not making any money,” CAPM’s Yasin said. “There are no local catalysts to increase liquidity.”

Emaar advanced as much as 1.1 percent, the most since Sept. 14, to 2.82 dirhams, before closing at 2.8 dirhams. Arabtec increased for the first time since Sept. 15 to 1.36 dirhams. Sheikh Butti bin Maktoum Al Maktoum resigned as chairman and will be replaced by Ibrahim Belselah.

Qatar’s QE Index increased 0.5 percent. Kuwait’s SE Price Index and Oman’s MSM 30 Index were little changed. Saudi Arabia’s Tadawul All Share Index advanced 0.4 percent. Bahrain’s BB All Share Index declined less than 0.1 percent.

Abu Dhabi’s ADX General Index fell 0.3 percent to the lowest since Aug. 21, dropping for a tenth day in its longest stretch of losses since November 2006.

--Editors: Susan Lerner, Claudia Maedler

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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