Dubai stocks, almost on a consistent upswing since the middle of February, on Sunday rallied to their highest level in 15 months as investors became more optimistic about an imminent recovery on the back of positive global signals.
The DFM General Index advanced 3.1 per cent to 1,754.20, the highest since November 2010, at the 2pm close on Sunday. The measure rallied 21 per cent in February, the biggest gain among benchmarks worldwide.
Arabtec Holding, the UAE’s biggest construction company, rose for the eighth time on Sunday by two per cent to Dh3.57, bringing its rally this year to 125 per cent, Dubai Financial Market surged 14 per cent to Dh1.19, the highest since August 4.
Aldar Properties led Abu Dhabi’s bourse to a seven-month high on Sunday. Shares in Aldar surged 6.8 per cent to their highest close since August after Moody’s raised its outlook on the developer to positive. The ADX General Index increased 0.7 per cent, rising for an eleventh day in the longest stretch of gains since May 2007.
Dubai’s shares have rallied 30 per cent so far this year after company earnings and dividends boosted investor confidence. Dubai’s rally has been consistent apart from a one-day dip on February 27 when the index retreated the most in more than two months on investor speculation that the month’s rally was overdone.
Dubai volumes also have surged this year, reaching 789 million shares on Sunday, the highest since December 2009 and compared with the 12-month daily average of 127 million shares.
Last week, Dubai shares jumped to a 10-month high as company earnings and dividends boosted investor confidence and after a Greek bailout and U.S. jobs data lifted global markets last week.
Analysts attribute the resilience to a combination of positive global trends including improving US economic data flow, indications from the US Federal Reserve that interest rates would remain near zero until late 2014, and signs that European sovereign debt pressures might be easing. An analyst pointed out that February was an exceptional month for the UAE markets, as the equities recorded significant growth and higher volumes. Brent prices also increased 12 per cent in February and helped the local bourses to sustain the bull-run.
Last month, the Dubai Financial Market rose almost 21 per cent and volumes increased four times from 800 million shares in November to 6.44 billion shares.
Complementing the positive global signals are upbeat projections on Dubai’s growth. Shaikh Ahmed bin Saeed Al Maktoum, Chairman of the Dubai Economic Sector Committee, said on February 15 that Dubai’s economy is on track to expand as much as five per cent this year after growing more than three per cent in 2011. Dubai’s Department of Economic Development sees growth of around 4.1 per cent for 2012.
Another factor contributing to Dubai’s upswing is its thriving tourism sector as its safe haven status continued to lure holidaymakers amid the geopolitical turmoil of the Arab Spring.