Big day for Tamweel as it rejoins main Dubai index

Tamweel marked another important step in its debut on the Dubai Financial Market after it was yesterday included on the main index, prompting shares to climb the most in a month

Tamweel, the home finance company majority-owned by Dubai Islamic Bank, yesterday marked a key transformation from its indebted days after it was included on Dubai's main index.

Shares in the mortgage company climbed the most in a month as its stock met the requirements for inclusion on the Dubai Financial Market (DFM) General Index and the banking sub-index, according to a statement on the Dubai bourse.

Analysts last month acknowledged the re-listing as an important step towards the company getting back on track.

Tamweel shares resumed trading in May after being suspended for more than two years when the financial crisis cut the company's access to credit.

Since then, the stock has been subject to heavy trading, and that is part of the reason the company was included on Dubai's index, analysts said.

Just a few days after being listed on May 10, Tamweel shares had climbed 6 per cent. But that surge followed a near 20 per cent slump in the first two days of trading since the shares were suspended in November 2008.

Jaap Meijer, a banking analyst at Alembic HC Securities, last month also initiated coverage with an "overweight rating" and a target price of Dh1.42 a share, to reflect the positive move for Tamweel.

Although market players agreed that the inclusion of the company on the DFM index and the banking sub-index does not have a significant impact on the fund manager's decision-making, the consensus pointed to a psychologically noteworthy development for the company because it presents a reversal in fortune.

Yesterday shares in the company rose as much as 3.4 per cent, the most since June 1, to close at 88 fils. It was trading at 99 fils before the suspension.

The outlook for the company also looks bright as analysts say it will most probably tap into the strong cash balances of its parent company, Dubai Islamic Bank, to address any funding gaps in the future.

Mr Meijer forecast a huge jump in net income for Tamweel to Dh21 million for the second quarter of this year, from Dh5m in the same quarter last year.

 

fhalime@thenational.ae

Published: July 4, 2011 04:00 AM

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