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Stocks Extend Rally

Dubai index mover Emaar Properties rose by 3.4 per cent to Dh4. Low-cost carrier Air Arabia outperformed the Dubai bourse, surging by 5.6 per cent to Dh1.14 to stretch its gains to 8.5 per cent in two days. It announced on Wednesday a joint venture with Travco Group to launch an Egypt-based low-cost carrier. The new airline will serve Europe, Middle East and Africa, making Egypt its third hub after the May launch of a hub in Casablanca, Morocco.

Emirates Telecommunications Corp. or Etisalat, the country’s biggest phone company, led gainers in Abu Dhabi, adding 3.4 per cent to Dh12.

The benchmark index of the Dubai Financial Market held its ground after breaching anew the 2,000 resistance level last Wednesday, rising by 1.5 per cent to 2,040.18. The index steadily climbed this week to gain 6.2 per cent from last week’s trading.

The main index of the Abu Dhabi Securities Exchange ended 1.4 per cent higher at 3,059.35 to gain 5.9 per cent from the previous trading week.

Volumes also improved with Dh1.2 billion and Dh466 million worth of shares changing hands in Dubai and Abu Dhabi, respectively.

“The uptrend could continue next week as investors continue to digest recent positive news flows. A slight profit-taking will take place after the successive rallies, but this will be short-lived as investors are regaining their appetite for risky assets,” said Vyas Jababhanu, head of investments at Al Dhafra Financial Brokerage in Abu Dhabi.

Jayabahanu said follow-through interest will continue after His Highness Shaikh Mohammed bin Rashid Al Maktoum said on Wednesday that the emirate would be able to repay at least $4.52 billion of debt due later this year. The Dubai government needs to repay a $1 billion Islamic bond msutring in November, and in December, a $3.52 billion Islamic bond by state-owned property developer Nakheel PJSC.

Rising oil prices is also giving traction to the global economic recovery hopes. The International Energy Agency has raised its global oil demand forecast for 2010, saying it expected consumption in China and the US, the world’s largest oil consumers, to further increase.

October Nymex crude oil futures were 52 cents higher at $71.83 a barrel, after weekly US oil inventory data from the American Petroleum Institute showed a drop of 7.2 million barrels in oil stocks. The Organization of Petroleum Exporting Countries concluded their regular meeting in Vienna on Thursday and decided to maintain production quotas.

“Investors are taking a lot of comfort in that, it will keep the Gulf economies going,” said Jayabhanu. The six member countries of the Gulf Cooperation Council supply about 20 per cent of the world’s oil requirements.

Haissam Arabi, chief executive officer of Gulfmena Alterntives Investments said both bourses, especially Dubai are likely to sustain the uptrend as investors attempt to test the new resistance level of 2,200.

“The momentum will be sustained as we have seen in recent weeks, the gradual but steady accumulation from foreign investors, this is structured buying, and it is also prompting retail investors to go along and try to push the markets higher. To break out to a new level though, volumes will need to be higher.”

Select laggard stocks in Dubai played catch-up, including bourse operator Dubai Financial Market PJSC which ended 1.6 per cent higher at Dh1.97. The Global Investment House jumped by 8.1 per cent to Dh1.74.

In Abu Dhabi, blue chips led by the Abu Dhabi Islamic Bank rose by 4.1 per cent to Dh3.13. Natural gas producer Dana Gas added 1.7 per cent. Property stocks were paced by market leader Aldar Properties which rose by 2.6 per cent to Dh5.50. Second-ranked Sorouh Real Estate surged by 4.6 per cent to Dh3.26.

rocel@khaleejtimes.com