Emaar lifts Dubai stocks after credit upgrade

07/02/2014 08:39 AST

Shares in Dubai’s Emaar Properties surged to a 65-month high after the firm regained its investment-grade credit rating, while Egyptian shares rose amid a regional uptrend on expectations that the army chief would run for president.

Emaar, Dubai’s largest developer, jumped 4.7 percent to AED8.30. Standard and Poor’s raised its long-term rating of Emaar to BBB-minus, the lowest investment grade, from BB-plus, a confirmation that international investors have regained confidence in Dubai’s property sector as it recovers from its 2008 crash “The credit story is catching up with the equity story,” said Sanyalaksna Manibhandu, senior analyst at NBAD Securities.

Manibhandu said the credit rating would help Emaar secure financing at a cheaper price than before, aiding its profit.

“Equity analysts will be more willing to rerate Emaar, but we already knew the company manages its finances well — by making sure that it has enough financing before they launch their projects,” he added.

NBAD Securities has a price target of AED9.65 for the stock.

Dubai’s benchmark rose 1.5 percent to 3,931 points, up for a third consecutive session to hit a new five-year high. On Wednesday, it confirmed a break above technical resistance at 3,807 points, the 50 percent retracement of its fall from the 2008 peak.

In Egypt, Cairo’s benchmark climbed 1.1 percent but closed just below Sunday’s 45-month high after a Kuwaiti newspaper quoted Egyptian army chief Field Marshal Abdel Fattah Al-Sisi as saying he would run for president.

“Most of the locals are reacting positively to the Kuwaiti report despite the announcement not being official,” said Mohamed Radwan, director of international sales at Pharos Securities.

“Investors believe that all the hype around Sisi is more or less leading the way for an official announcement to come next week.” Many Egyptian investors view Sisi as the best chance for political and economic stability.

Shares in Qatar National Bank Al-Ahly, the Egyptian unit of the big Qatari bank, gained 4.3 percent after the lender proposed a capital increase through bonus shares.

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