UAE markets in milestone gains on Dubai news
Dubai, December 14, 2009
UAE stocks made near-maximum gains as Abu Dhabi's $10 billion bailout of Dubai lifted both emirates' benchmarks to milestone advances.
Abu Dhabi's benchmark climbed 7.9 per cent to 2,821 points, in its biggest one-day gain since at least April 2007, while Dubai's index jumped 10.4 per cent to 1,871 points. The latter's gain is its largest for 14 months.
'We're in the process of a knee-jerk reaction - there was a violent move on the downside and now we're seeing the equivalent move upwards,' said Julian Bruce, EFG-Hermes director of institutional equity sales.
'Dubai has passed the initial hurdle of Nakheel's bond, now we need further clarification on the exact proposals for restructuring of Dubai entities and how they will be treated.'
On Monday, Abu Dhabi said it would provide Dubai with a $10 billion injection in a surprise move. This money will in part pay off Dubai World unit Nakheel's $3.5 billion bond and follows a tumultuous three weeks as UAE markets crashed after Dubai World asked for a debt standstill on November 25.
Fifteen Dubai stocks rose more than 14 per cent, with 15 per cent the maximum daily limit. Volumes slumped to a two-week low as most stocks hit limit-up in early trading, with investors unwilling to sell at these prices in expectation of further gains this week.
Dubai's index had risen for the past three sessions, but remains down 10.6 per cent since Dubai World's shock debt request.
'Once we pass this initial phase of knee-jerk buying, the market will settle down as investors await clarity and transparency on the restructuring process,' adds Bruce.
In Abu Dhabi, 34 stocks ended more than 9 per cent higher, with the maximum daily move 10 per cent.
Kuwait's benchmark hit a three-week high as Dubai-linked firms rallied on the emirate's $10 billion bailout by Abu Dhabi. These stocks were hammered after Dubai World asked for a debt standstill on November 25, but are now resurgent.
Ekittitab Holding climbed 9.8 per cent and Al Madina Finance and Investment Co added 7.7 per cent.
'We're reacting to what's happening in Dubai and overall I like the market - volumes are up,' said a Kuwait-based trader who asked not be identified.
Global Investment House climbed 4 per cent, extending gains after agreeing a $1.7 billion debt restructuring late last week.
Agility fell 4.8 per cent. The logistics firm has been accused of overcharging the US Army to the tune of $60 million over a 41-month period.
Kuwait's index climbed 0.9 per cent to 6,908 points as volumes hit a three-week high.
Bahrain's measure rose 1.6 per cent to 1,447 points, its largest one-day gain since June 17.-Reuters