Dubai index rebounds as Emaar weighs

Dubai shares rallied to lift the index higher following Sunday's 6.1 per cent slump, its largest one-day loss since early November. The Dubai Financial Market's main index was up 2.87 per cent on Monday to close at 1,795.23 points. 

Dubai Islamic Bank climbed 5.8 per cent after falling 9 per cent the day before, while Arabtec rose 2.9 per cent as eight stocks add more than 2 per cent.

"There is some short-term or intraday upward momentum as people take advantage of low valuations," says Chamel Sahmy, Beltone Financial regional senior sales trader.

The benchmark climbed 0.2 per cent to 1,748 points.

Emaar Properties fell 2.08 per cent to Dh2.83 at the end of trading day on Monday, rebounding from an intraday low of Dh2.71 as investors continue to sell ahead of its planned merger with three property units of Dubai Holding.

"It's very difficult to evaluate the transaction," says Robert McKinnon, Al Mal Capital managing director of equity research.

"In real estate, there aren't a lot of synergies from scale. They could probably source raw materials cheaper, but there aren't much synergies in terms of the workforce, that's only applicable at an executive level."

Drake & Scull climbed 2.2 per cent after the company said on Sunday it had bought 8.6 million shares after receiving regulatory approval to buy back up to 10 per cent of its stock.

Meanwhile, property stocks also dragged Abu Dhabi's index lower as investors take a negative view of the sector ahead of a planned merger between Emaar Properties and three real estate units of Dubai Holding.

RAK Properties plunged 6.9 per cent, Aldar Properties lost 4.6 per cent and Sorouh Real Estate dropped 3.8 per cent in early trading.

"There's gloomy outlook for the real estate sector after Emaar's announcement, with the big question being how does this help Emaar and its shareholder?" asks Sahmy.

"The merger news has hit the sector because it highlights the fact there's still some weakness in the real estate market."

Abu Dhabi Commercial Bank rebounded, climbing 1.3 per cent. It fell 13 per cent in the three sessions after a banking source said the lender was owed at least $500 million (Dh1.8 billion) by the troubled Saudi family conglomerates Saad Group and Ahmad Hamad Algosaibi Group & Bros.

Abu Dhabi's index fell 0.19 per cent to 2,569.17 points as of 12:46pm (local time).

 

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