Dubai stocks gain 7pc

Friday, December 11, 2009
DUBAI: Dubai’s stock market closed 7.0 per cent higher on Thursday, its biggest gain since the debt crisis exploded, and led by Emaar Properties after it called off a merger with state-owned entities.

The Dubai Financial Market index closed 107.4 points up at 1,640.76 points. Shares in Emaar, the Middle East’s largest property firm by market capitalisation, closed 14.84 per cent up, at 2.94 dirhams (80 US cents), after heavy trading and wide fluctuations. Like Emaar, several leading shares also surged close to the maximum daily gain of 15 per cent, including Dubai Islamic Bank, which rose by 14.53 per cent.

Total trade surged to 1.113 billion dirhams (305 million dollars), with 27 out of 28 traded companies posting gains. The market opened slightly higher, but plunged by more than four per cent within less than half an hour before rising to its highest close since November 25. It was then that Dubai requested a freeze on debt repayments by its largest and most indebted group, Dubai World, liable for 59 billion dollars.

The losses on Wednesday brought with them a cumulative decline of over 26 per cent since Dubai’s debt alert, erasing all the gains made this year. Thursday’s surge was only the second time the market has closed in green since then. Emaar said late on Wednesday it had decided to cancel merger plans with the heavily indebted property arm of government-owned Dubai Holding.

Talks had been ongoing to link Emaar and three Dubai Holding property units, Dubai Properties, Sama Dubai and Tatweer.

“With this news that the planned merger has been called off, a large degree of uncertainty and overhang from this potential merger has dissipated,” said regional investment bank EFG-Hermes in a statement.

It said that cancelling the merger talks shows that a “distinction is being made between ‘good’ and ‘bad’ assets, as well as ‘corporate’ and ‘sovereign’ assets.”

Meanwhile, the government utilities firm Dubai Electricity and Water Authority denied reports that its long-term debt might be redeemed early due to Dubai World’s debt problems.

“The news ... has nothing to do with the truth. We don’t have any possibility of lenders asking for early payments nor are we planning to delay anything,” Emirates Business daily quoted top company official Abdullah al-Hajri as saying. The Financial Times had reported on Wednesday that the firm’s 2.0-billion-dollar securitisation programme, originally maturing in 2036, “may have to be redeemed in full on December 14, the day Dubai World’s property developer, Nakheel, is due to redeem” its 3.5-billion-dollar sukuk bond.

In other Gulf markets, Abu Dhabi recovered 1.43 per cent to 2,502.24 points at closing after it was down 1.33 per cent in early trading. Construction and real estate led the early drop by 3.06 per cent and 2.94 per cent respectively. Construction reduced its losses to just 0.10 per cent by the end of trading, while real estate recovered 3.6 per cent.

In Qatar, the stock market recovered on Thursday, closing 1.19 per cent up after dropping 1.99 per cent on Wednesday. The Kuwait Stock Exchange closed 0.21 per cent up after it was down 0.1 per cent around midday. The Saudi bourse, the Gulf’s largest, was shut for the weekend.