UAE shares rose sharply on Tuesday, sparked by a rally in global stocks after the US government detailed plans to wipe out toxic debts and assets.
Emaar Properties, the biggest property developer in the Middle East paced winners in the Dubai bourse, outperforming the market to surge 10.5 per cent at Dh2.42.
The Dubai Islamic Bank jumped 10.27 per cent to Dh2.79.
The Dubai Financial Market (DFM) benchmark index climbed 4.13 per cent to 1,622.28, its biggest one-day gain in a month, with property stocks rising 8.4 per cent.
New cash, mostly by foreign institutions was pumped into the market, boosting Dubai volume turnover with 1.07 billion shares worth Dh1.423 billion changing hands.
“The US plan was well-received. The 1660 resistance level on the DFM now looks just over the horizon and achievable this week,” said Matthew Wakeman, managing director of cash-and-equity-linked trading at EFG-Hermes.
The main index of the Abu Dhabi Securities Exchange rose to its biggest one-day gain this year, edging up 4.49 per cent to 2,533.78.
“This was not your usual rally, the buying spree was not led by speculators. In both exchanges, we did not see quick price movements, but instead saw a steady build-up of share prices, indicating new appetite for risks,” said Samer Al Jaouni, General Manager of Middle East Financial Brokerage Co.
The rally in oil prices on Monday, spurred by the rally on Wall Street also encouraged buying, said Al Jaouni.
Crude oil prices on Tuesday came off their 3 per cent rise in the previous session to close $53.63 per barrel after settling $53.80, up $1.73 on Monday.
Also outperforming the Dubai market was Dubai Islamic Bank, the country’s biggest Islamic Bank after it said it planned to raise capital by Dh3 billion in five years.
“Dubai Islamic Bank has numerous stories in play such as its Tamweel stake, raising capital and its role in the syndicate to refinance Dubai Electricity and Water Authority’s $2.2billion loan,” said Wakeman.
Arabtec Holding, the country’s largest construction company building the world’s tallest skyscraper in Dubai, edged up 6.02 per cent to Dh.176.
Deyaar Development added 2.04 per cent at Dh0.50, while Union Properties finished 4.47 per cent higher at Dh.0.70.
In Abu Dhabi, property stocks rose 8.41 per cent while banks gained 2.24 per cent.
Aldar Properties jumped 9.67 per cent to Dh2.75 while Sorouh Real Estate rose 8.12 per cent to Dh2.57.
“I would expect some ongoing investor focus on Aldar and Sorouh at these levels as their peers in Dubai turn positive on the year in terms of stock price. Abu Dhabi’s demand for housing still outstrips supply and development is at an earlier stage than in Dubai,” said EFG-Hermes’s Wakeman. Emirates Telecommunications Co. or Etisalat, the country’s biggest phone company, rose 8 per cent to Dh13.65 after the company announced a dividend of 35 fils for the second half of 2008 and one free share for every five held.
Follow-through buying in First Gulf Bank pushed its shares at Dh8.80 or 6.25 per cent higher after it paid its $750-million syndicated term loan.
Ras Al Khaimah Ceramics, manufacturer of tiles, sinks, toilets and bathtubs, gained 9.68 per cent to Dh1.36 after it was rated a “buy” in the initial coverage of Global Investment House.