Dubai Stock Index Rises To Fresh 41-Month High

Most Gulf markets rose as upbeat sentiment in local fundamentals encouraged renewed buying.

UAE bourses rallied, with Dubai’s measure up 1.9 percent to end at a fresh 41-month high.

The number of shares changing hands — at 547.9 million — is the highest one-day volume on the index in 14 months.

Air Arabia and Dubai Investments jumped 5.8 and 5.7 percent respectively.

Sentiment has improved in the emirate as Dubai successfully restructured some of its maturing debts and repaid others, and the two main sectors present on the exchange — real estate and banks — have somewhat recovered from the 2008 financial crisis. Dubai’s government said earlier it had fully repaid AED 3.34 billion ($ 909 million) of bonds which were due on April 23.

“Despite the rally, valuations in the UAE are still attractive,” said Rami Sidani, head of investment at Schroders Middle East. “Yields are compelling with as much as 5-6 percent in the main Abu Dhabi banks. This will keep driving interest.”

Abu Dhabi’s index advanced 0.8 percent, extending year-to-date gains to 25.7 percent. Energy firm Dana Gas was the main support, rising 7.7 percent on market talk it may spin off operations in Kurdistan into a new listed company. The company denied the speculation.

National Bank of Abu Dhabi shed 2 percent but the stock is still up 28.2 percent in 2013. JP Morgan cut its rating on NBAD to ‘neutral’ in a May 3 note, saying the share price is trading at a premium level of 10.9-times estimated 2013 earnings.

“In the current low yield environment with limited domestic lending growth opportunities, we believe that the best way ahead for banks like NBAD — with higher than required Tier 1 in our view — to enhance underlying return on equities is by optimizing (the) capital structure,” it said, pointing toward higher dividends, share buybacks and acquisitions as ways to do this. The US investment bank upgraded Abu Dhabi Commercial Bank to overweight and retained its overweight rating on First Gulf Bank, it said in the same note.

Qatar’s bourse gained 0.4 percent to a fresh 11-week high, and Oman’s index rose 0.5 percent.

Kuwait’s benchmark climbed 1.6 percent, extending its 2013 advance to 30 percent. Egypt’s exchange was closed due to a public holiday.