Dubai stocks surge on Emaar, Arabtec dividend speculation

Dubai’s bourse posted its highest daily gain since late January yesterday as investors scooped up shares of real estate and construction companies on hopes for increased dividend payouts.

The Dubai benchmark rose 2.9% to 4,984 points, its highest level since August 2008, while turnover more than doubled compared to the previous session.

Real estate developer Emaar Properties, whose shares rose 3.9%, and construction firm Arabtec, up 9.5%, contributed the most to the increase.

Both companies will hold annual shareholder meetings this month to discuss, among other issues, dividend payouts for 2013. Some investors are betting that the companies will end up paying more than initially suggested by their boards, said Sanyalak Manibhandu, manager of research at NBAD Securities.

“There are rumours that there will be different profit distribution,” he said.

Emaar’s shareholders will meet tomorrow; its board has proposed paying a 15% cash dividend and issuing 10% bonus shares. Arabtec’s shareholders will discuss a proposed 10% cash dividend and a 30% bonus share issue on April 30. Neither of the companies has officially announced any plans to review the proposed dividends.

The third biggest contributor to Dubai’s jump was property developer Deyaar, whose shares rose 6.1% as they became open to investment by foreigners from outside the Gulf. According to bourse data, non-Gulf investors owned 0.4% of Deyaar’s stock after the close yesterday; UAE investors reduced their holdings to 94.4% from 95.1% at the same time.

Yesterday’s surge brought Dubai close to the psychologically important mark of 5,000 points and increased year-to-date gains to 48%.

“I think we are still at the end, or at a fairly mature stage, of the rally which has been going on since the start of 2013,” said Manibhandu from NBAD Securities. “The culmination of the rally will be the upgrade of Dubai to emerging market status” by index compiler MSCI at the end of May, he added.

Abu Dhabi’s index rose 1.0% to a fresh eight-year high of 5,192 points on the back of stocks that look likely to be included in the MSCI emerging markets index.

Real estate developer Aldar Properties, also a likely MSCI index pick, added 4.5% after it announced three new projects worth a total of $1.4bn yesterday and said it was looking at 20 more.

In Saudi Arabia, the main index retreated 0.2% from a six-year high reached on Sunday.

Shares in Saudi Electricity Co fell 1.5% after it reported a wider-than-expected net loss for the first quarter.

Elsewhere in the Gulf, Kuwait’s index rose 0.7% to 7,484 points; Bahrain’s bourse climbed 0.5% to 1,392 points, while Oman’s measure slipped 0.09% to 6,835 points.