Bloomberg News

Dubai Shares Extend Best Start to Year Since 2005; Egypt Drops

April 01, 2012

Dubai’s benchmark stock index rose, extending its best start to a year since 2005, amid investor optimism corporate earnings may beat expectations as the emirate recovers from the debt crisis. Egyptian shares fell.

Gulf Navigation Holding PJSC (GULFNAV), Dubai’s only publicly traded tanker owner, climbed to the highest in week after reporting results. Dubai Financial Market PJSC (DFM) rose to the highest in two weeks. The DFM General Index (DFMGI) advanced 0.8 percent to 1,661.67 at the 2 p.m. close in the emirate, taking this year’s rally to 23 percent. The measure is the third-best performing gauge in the Middle East this year after Egypt’s and Saudi Arabia’s. The EGX 30 Index (EGX30) tumbled the most in a week amid rising political tension between the military and the dominant Islamist group.

Three years after Dubai almost defaulted on about $25 billion of debt, corporate earnings are improving as the economy recovers. Dubai Financial Market, the only publicly traded stock market in the Persian Gulf, is forecast to return to profit this year as trading volumes rise. Emaar Properties PJSC (EMAAR), the developer of the world’s tallest skyscraper, may report a 10 percent increase in net income this year, according to the mean estimate of 12 analysts on Bloomberg.

“The global macro picture is more positive than in 2011 and strong corporate results and dividend announcements in the United Arab Emirates are also helping,” said Samer Darwiche, an associate at Dubai-based Gulfmena Investments Ltd.

Oil Reserves

U.S. stocks advanced last week, with the Standard & Poor’s 500 Index completing the biggest first-quarter rally since 1998, after Federal Reserve Chairman Ben S. Bernanke said he will keep stimulating the world’s biggest economy and Europe agreed to increase rescue funds. Brent oil climbed 14 percent last quarter. The Gulf Cooperation Council, a grouping of Saudi Arabia, the U.A.E., Oman, Bahrain, Kuwait and Qatar, sits on one fifth of the world’s proven oil reserves.

Emaar has proposed a 10 fils cash dividend a share for 2011. Emirates NBD (EMIRATES) PJSC, Dubai’s biggest lender, is trading at a dividend yield of 6.5 percent, while the 31 companies listed on the index were trading at a dividend yield of 4 percent on March 29. Emaar, which has the biggest weighting on the benchmark index, advanced 1.3 percent and Emirates NBD gained 1.3 percent.

Gulf Navigation rose 2.3 percent to 36.4 fils, the highest since March 26. The company’s full-year loss narrowed as expenses related to asset sales fell. Dubai Financial Market gained 2.6 percent to 1.18 dirhams, the highest since March 15.

Egypt’s Drop

The Bloomberg GCC 200 Index (BGCC200), which tracks the biggest 200 companies in the Gulf Cooperation Council, added 0.7 percent and Saudi Arabia’s gauge gained 0.9 percent. Abu Dhabi’s benchmark, Qatar’s QE Index (DSM) and Oman’s MSM30 Index climbed 0.6 percent, while Kuwait’s measure was little changed. Bahrain’s gauge was unchanged.

Egypt’s benchmark measure dropped 1.4 percent, the biggest decline since March 25, after the Muslim Brotherhood nominated Khairat el-Shater as its presidential candidate, raising investors’ concern that tension between the dominant power in parliament and the interim military rulers will rise. The group, which has criticized the military for not firing the cabinet of Prime Minister Kamal El Ganzouri, had pledged not to field a candidate for president.

“The nomination of el-Shatter is a signal for some that we may be getting closer to a clash between the Brotherhood and the military council,” said Wafik Dawood, director of institutional sales at Cairo-based Mega Investments Securities. “Also, on the corporate level, the withdrawal of land from Sodic is raising uncertainty about the future of the real estate sector.”

Sodic, as Six of October Development & Investment Co. (OCDI:US) is known, said a government agency withdrew a plot of land it had awarded for Sodic’s Eastown project on the outskirts of Cairo. Sodic said it plans to appeal the ruling. The shares tumbled 3.7 percent to 15.83 Egyptian pounds, the lowest since March 19.

Israel Shares Rise

Israel’s TA-25 benchmark index advanced 0.4 percent, led by Teva Pharmaceutical Industries Ltd. (TEVA:US) The yield on the nation’s benchmark Mimshal Shiklit government bonds due January 2022 rose one basis point, or 0.01 percentage point, to 4.68 percent.

To contact the reporter on this story: Alaa Shahine in Dubai at asalha@bloomberg.net

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


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