Expo bid by Dubai boost for bourses in Emirates

Investors are confident that Dubai will win the World Expo 2020, giving a lift to stock markets.

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Local bourses are expected to outperform in the coming months, amid investor bets that Dubai will win the World Expo 2020, brokers said.

Every five years for a period of six months, World Expos attract millions of visitors to exhibitions and events staged by hundreds of participants on a national, international and business and cultural level. They can have a major impact on the host city.

The Shanghai 2010 World Expo helped to transform a heavily industrialised city-centre area into a thriving cultural and commercial district while also bringing its theme "Better City, Better Life" to the attention of 73 million people.

A decision on Expo 2020, for which the UAE is bidding under the theme "Connecting Minds, Creating the Future" is expected to be made in November.

"The market has been pricing in the event, which will get the country back on the hype," said Nabil Al Rantisi, the managing director of brokerage at Mena Corp in Abu Dhabi. "If Dubai gets it, they will need to build more real estate, contracts will get more business and banks will start financing again. It's like the Olympics, but for the business and trade community."

The next event in 2015 will take place in Milan, Italy. The Expo has never been held in the Middle East, Africa or South East Asia.

Dubai is competing with Ayutthaya, Thailand; São Paulo, Brazil; Yekaterinburg, Russia; and Izmir, Turkey.

The Dubai Financial Market General Index has risen about 30 per cent so far this year, trading at 2,177.68. It traded 600 million shares on Thursday, more than double the average in recent months. The Abu Dhabi Securities Exchange has risen about 25 per cent in the same period, trading at 3,369.21.

"Just in the last four to five sessions, we traded close to Dh1 billion for the two markets combined," Mr Al Rantisi said.

"Dubai is marketing very heavily ahead of the announcement."

Sebastien Henin, a portfolio manager at The National Investor in Abu Dhabi, said he expected speculation on small-cap stocks to be in the spotlight in the lead-up to the announcement.

"The closer we will be from the election date, names in real estate, to construction, to cement will gain a lot of speculation," he said.

"Cement stocks have very cheap valuations right now, but if Dubai wins, they could really double in price."

Dubai's bid has six premier partners - Dubai Airports, Emirates Airline, Emirates NBD, Etisalat, DP World and Jumeirah Group. This approach to partnerships has gained valuable international exposure for the bid.

The Expo theme "Connecting Minds, Creating the Future" overarches three sub-themes - mobility, sustainability and opportunity.

"The Dubai Expo 2020 theme reflects the belief that tomorrow's challenges will be far too complex to be met in isolation," reads the official bid dossier.

"Whatever you can say on [Dubai] based on financials, at least they have always delivered," Mr Henin said. "When it comes to events, they have a clean track record. They have come to agreements and settled debt accords. They are strong with their bid."

Mr Henin's remarks echoed the Minister of State Reem Al Hashimy's statements during an interview with CNN's Marketplace Middle East programme: "Dubai has proven, in the last couple of years, its ability to rise above and beyond its challenges."