Container upturn boosts DP World

Port operator's shares among the most liquid in Dubai

The key factor behind DP World's latest surge: volumes. The port operator is benefitting from strong growth in container volume, which was reported last week, as well as the fact that its shares are among the most liquid in Dubai. DP World continued its ascent yesterday, gaining 1.4 per cent to close trading at 47 cents. Its shares rose more than 10 per cent last week and it was the most actively traded stock on the Dubai Financial Market (DFM) for three days.

Sudden interest in DP World's shares was sparked by the announcement that container volumes for the first half rose by 16 per cent on economic recovery in Asia, Australia and some European countries. The company said it also remained committed to listing some of its shares on the London Stock Exchange early next year, a move that had initially been planned for this year. "Their announcement to remain committed to a London listing has got retail investors excited more than the institutional investors," said Saad Chalabi, an institutional investor at AlRamz Securities in Abu Dhabi. "Of course strong container volume numbers also helped trigger the gains last week."Investors were beginning to take advantage of DP World's heightened visibility, with some trying the stock for the first time, Mr Chalabi said.

That trend has helped DP World at times outpace top-volume Dubai stocks such as Arabtec Contruction and Emaar Properties. DP World is listed on the NASDAQ Dubai but trades on a common platform alongside DFM shares since a consolidation was completed last month. DP World has made its recent gains despite an unfavourable assessment from Shuaa Capital, which says the stock could face technical pressure at 49 US cents.

"Currently the stock trades at 47 cents and the risk-reward profile remains unfavourable. As such, no buying should take place," Shuaa analysts said in a note to investors yesterday. Mr Chalabi believes otherwise, arguing that DP World is fairly valued compared with its global peers and can offer solid rewards for retail investors. [e-mail]