Hopes Dubai World will soon unveil a $26 billion debt restructuring gave another boost to UAE markets, but Middle East markets were mixed as investors cashed in Sunday’s gains.
Emaar rose 5.4 percent to its highest finish since Jan. 20. “Investors believe it’s cheaper to buy Emaar through its Dubai listing than through the IPO,” said Robert McKinnon, ASAS Capital chief investment officer. Although details are sketchy, investors are betting they will benefit from an IPO windfall, McKinnon said.
“There’s now a real investment play and we might see a rally for a little bit longer, barring any substantial negative news hitting the market,” added McKinnon. Dubai’s index rose 1.7 percent to a four-week high, while Abu Dhabi hit a two-month peak as banks surged on bets Dubai World’s debt deal would not be as harsh on creditors as feared.
National Bank of Abu Dhabi climbed 4.5 percent and Abu Dhabi Commercial Bank rose 4.7 percent. “There is a speculative move that Dubai World restructuring will be resolved this time,” said Ahmed Hamdi, senior relationship manager at Prime Emirates.
“The bad news is already priced in and I can feel more optimism when I talk to clients. At the end of last year, there was a sell-off in the market and at some point this cash has to come back in again and that could be happening now.”
The cost of insuring Dubai’s debt against default fell and Dubai World subsidiary Nakheel’s 2011 bond rose on Monday, while Dubai World may put its debt plan to creditors this week, bankers said.
Saudi Arabia’s Tadawul All-Share Index (TASI) ended lower for a first session in five, easing from Sunday’s 19-week high.
The market closed with a minor loss of 0.1 percent at 6553.99 points. The sector activity was widely negative with 10 out of 15 sectors closing in the red with losses ranging from 0.07 percent by the Transport and Agriculture and Food industries sectors to 1.71% by the Media and Publishing sector, the Financial Transaction House (FTH) said in its daily market comment.
The gaining sectors on the other hand ranged from 0.18 percent by the Hotel and Tourism Sector to 0.67 percent by the Energy and Utilities sector.
The overall market breadth was negative with 42 advancers against 80 decliners giving an AD ratio of 0.525, FTH said.
Saudi Basic Industries Corp (SABIC) hit a 16-month high, rising 0.3 percent as oil prices extended gains.
“When oil prices improve, investors tend to buy petrochemical stocks — rising oil demand should translate into rising demand for petrochemical products,” said Asim Bukhtiar, senior investment analyst at Riyadh Capital.
National Bank of Kuwait fell 1.7 percent after its board approved a 10 percent capital hike in a move that will be dilutive to existing shareholders.
Qatar Telecommunications Co. (Qtel) dropped 3.1 percent after the firm recommended a reduced dividend as fourth-quarter profit fell. Oman’s index fell for a third session in four as investors sold up to reinvest in high dividend yield stocks.
“We’re very much affected by Dubai,” said Adel Nasr, United Securities brokerage manager.
“If an agreement is reached about Dubai World I believe the Oman market will strongly rebound,” he said.
— With input from agencies