Persian Gulf Shares Rebound on Fed's Bailout Plan; Emaar Climbs

By Zainab Fattah

Sept. 21 (Bloomberg) -- Persian Gulf shares advanced as the U.S. government announced a plan to buy $700 billion in bad mortgage investments from financial companies to purge banks of bad assets and after global markets rallied late last week.

Emaar Properties PJSC, the Middle East's biggest publicly traded real-estate company, jumped the most since 2005. National Bank of Abu Dhabi PJSC rose the most in almost eight months and Zain gained after raising $4.49 billion through a capital increase.

``The Fed's bailout will write off bad debt which is great news and gives banks the opportunity to recover,'' said Haissam Arabi, a Dubai-based managing director of asset management at Shuaa Capital PSC who oversees $1.8 billion.

The Dubai Financial Market General Index climbed 7.8 percent to 4,229.87 at 1:21 p.m. local time, its biggest one-day gain since Jan. 23. The Abu Dhabi Securities Exchange General Index added 5.8 percent, while the Kuwait Stock Exchange Index rose 3.3 percent.

U.S. stocks surged late last week in the biggest two-day global rally in 38 years as the government announced plans to purge banks of bad assets and crack down on speculators who drove down shares of financial companies. Yesterday, the Bush administration sought unchecked power from congress to buy $700 billion in bad mortgage investments from financial companies in what would be an unprecedented government intrusion into the markets. Treasury Secretary Henry Paulson aims to avert a credit freeze that would bring the financial system and the world's largest economy to a standstill.

Injection

The Kuwait Investment Authority may inject as much as 1 billion dinars ($3.75 billion) into Kuwait's stock market to alleviate recent declines, Asharq al-Awsat reported today, citing unidentified officials. The Kuwaiti government last week urged the KIA, the country's $250 billion sovereign wealth fund, to infuse 300 million dinars into Kuwait's stock market, which has seen shares lose 12 billion dinars in value so far this month, the newspaper said.

Emaar jumped 13 percent to 7.9 dirhams, its biggest gain since June 2005. Aldar Properties PJSC climbed 9.9 percent to 7.79 dirhams. Emaar has still dropped 13 percent this month, while Aldar is down 20 percent so far in September.

`Most Hit'

``Real-estate stocks are reacting because they are the most volatile and liquid and were most hit as foreign investors withdrew when global markets plummeted earlier this month,'' said Sherif Abdel Khalek, regional sales executive at Beltone Securities Brokerage in Dubai.

Emaar Misr for Development SAE, a unit of Emaar, will invest 12 billion Egyptian pounds ($2.1 billion) in a luxury real-state project in Cairo, Al-Alam al-Yom reported Sept. 18, citing the company's Chief Executive Officer Sameh Mohtadi.

National Bank of Abu Dhabi, the U.A.E.'s second-biggest bank by assets, surged 7 percent to 16 dirhams, the biggest gain since Jan. 23.

Zain soared 7.3 percent to 1,760 fils, its largest advance since November 2005. The Kuwaiti phone company with operations in 22 Middle Eastern and African countries said it raised $4.49 billion through a capital increase in which 99 percent of its shareholders subscribed.

Tadawul Falls

Oman's Muscat Securities Market 30 Index rose 4.3 percent, its largest gain since November 2000. Qatar's Doha Securities Market Index surged 7.9 percent, while the Bahrain All Share Index added 0.8 percent. Saudi Arabia's Tadawul All Share Index declined 0.6 percent, ending two days of advances.

Al-Mazaya Holding Co. climbed 5.9 percent to 720 fils. The Kuwait-based property developer said it plans to set up two new units in Bahrain and Ajman, the United Arab Emirates.

Gulf General Investment Co. added 4.4 percent to 9.45 dirhams. The investment company based in the U.A.E. merged its brokerage unit with Germany's Baader Bank AG.

National Central Cooling Co. advanced 7.3 percent to 1.62 dirhams. The air-conditioning company, known as Tabreed, plans to spend 4 billion dirhams ($1.1 billion) in the next two years on expansion.

To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net.