Dubai Shares Advance Most Since March on Emaar Earnings, European Outlook

By Zahra Hankir - Oct 30, 2011 9:00 PM GMT+0700

Dubai’s shares surged the most in more than seven months after profit at Emaar Properties PJSC beat estimates and European leaders agreed to expand a bailout fund, boosting demand for riskier assets. Israel’s benchmark index declined.

Emaar, the developer of the world’s tallest tower, soared the most since March. Dubai Islamic Bank PJSC, the United Arab Emirates’ biggest bank complying with Shariah rules, advanced the most in six months after posting a 10 percent increase in third-quarter profit. The DFM General Index jumped 2.6 percent, the most since March 13, to 1,415.78 at the 2 p.m. close in Dubai. Abu Dhabi’s ADX General Index rose 1.5 percent, led by banks.

“The primary catalyst is the improvement in third-quarter numbers,” said Julian Bruce, equity sales head at EFG-Hermes Holding SAE in Dubai. “Abu Dhabi banks set the scene, but both domestic and international investors were waiting for Emaar results. Also, an improving picture in Europe is encouraging the previously risk-averse to get back in amongst it.”

National Bank of Abu Dhabi PJSC, the emirate’s biggest lender by assets, last week posted a 12 percent increase in third-quarter net income, beating analyst estimates, and profit at Abu Dhabi Commercial Bank PJSC, the United Arab Emirates’ third-biggest bank, almost doubled. NBAD rose 4.4 percent and ADCB gained 3.5 percent.

Global Rally

European leaders agreed to boost the firepower of the region’s rescue fund to 1 trillion euros ($1.4 trillion) and persuaded bondholders to take 50 percent losses on Greek debt, pushing the Stoxx Europe 600 Index up 4.2 percent for the week. In the U.S., the S&P 500 surged 3.8 percent after the U.S. economy expanded at the fastest pace in a year. Crude for December delivery rallied 6.8 percent last week to $93.32 a barrel. Gulf Arab oil exporters, including the U.A.E. and Saudi Arabia, supply about a fifth of the world’s oil.

Emaar surged 5.8 percent to 2.75 dirhams. The company with the heaviest weighting on Dubai’s index reported third-quarter profit of 406 million dirhams ($110 million). That beat the median estimate of three analysts in a Bloomberg survey for profit of 342.7 million dirhams. The company is expanding abroad and focusing on assets that generate recurring income such as hotels and shopping centers.

Dubai Islamic Bank advanced 3.1 percent, the most since April 20, to 2.02 dirhams. Third-quarter profit increased to 298 million dirhams from 270 million dirhams a year ago. That beat the average estimated profit of 245.5 million dirhams of two analysts surveyed by Bloomberg.

Saudi Falls

U.A.E. markets “have recently reached technical levels at which investors, particularly locals, feel there is little downside,” EFG’s Bruce said. Before today, Dubai’s index had declined 20 percent in the past 12 months and Abu Dhabi’s 12 percent.

About 206 million shares traded in Dubai today, compared with this year’s daily average of 108 million shares.

Egypt’s benchmark EGX 30 Index advanced 2.6 percent, the biggest jump since Aug. 10, to 4,452.81. Kuwait’s gauge and Oman’s MSM 30 Index increased 0.1 percent, while Qatar’s QE Index climbed 1 percent. Bahrain’s BB All Share Index closed unchanged and Saudi Arabia’s Tadawul All Share Index slipped 0.1 percent after climbing 1.4 percent yesterday.

Israel-Gaza Tension

Israeli shares declined the most since Oct. 4 and government bonds fell after violence between Israeli forces Palestinian groups escalated an on concern the government may need to increase borrowing.

The TA-25 Index dropped 1.5 percent at 3:22 p.m. in Tel Aviv and the yield on the 5.5 percent bond due in January 2022 increased one basis point, or 0.01 percentage point, to 4.65 percent.

Israeli air strikes have killed nine Palestinians in Gaza during the past 24 hours while Palestinians have fired at least 30 rockets and mortars, killing one Israeli, the Israeli army said.

“The escalation of tensions in the south of the country, the concern about the impact of changes in government regulation and persistent concerns that the positive sentiment in the international markets will not last” have pushed stocks lower, Gil Dattner, an equity analyst at Bank Leumi Le-Israel Ltd. in Tel Aviv, said by telephone.

Israel’s cabinet will vote on tax changes recommended by a panel set up after hundreds of thousands of Israelis protested this summer demanding lower prices, more affordable housing and more subsidies for education.

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