Dubai shares surge as market plays catch up

The market rallied 4.1 per cent as oil closed above $60 a barrel and global fund managers bought into local stocks.

The Dubai stock market rallied 4.1 per cent as oil closed above $60 a barrel and global fund managers bought into local stocks, pushing Emaar Properties to close at a five-month high. Dana Gas rose to a seven-month high after announcing a new gas find in the Nile delta in Egypt. "Obviously such an oil price run-up will feed into the economy and can eventually attract capital back to the stock market," said Yong Wei Lee, a senior funds manager at EIS Securities, the asset managing arm of Emirates NBD. Oil income accounts for more than one third of the Emirates' GDP.

The Dubai Financial Market Index ended the day at 1734.54, up 4.1 per cent, while Abu Dhabi's main index rose 0.5 per cent to close at 2625.81. "These markets here have been long underperforming and they are now catching up with overall emerging markets," said Yazan Abdeen, a funds manager at ING Management. "Dubai will profit from this in the short term." Local markets now stand a "good possibility of rallying until there could be new negative news from the property market in June or July", Mr Abdeen added.

Many analysts are fearing a great departure of expatriates this summer, as many families may wait until the end of the school year to leave the Emirates. Mr Lee said property remained the key for a broader and more sustained recovery in UAE markets. "Unless confidence returns to the real estate sector, it is difficult to see a strong comeback for UAE stocks." Emaar Properties rose 12.6 per cent amid high volumes.

The stock, which lost 85 per cent last year, closed at Dh2.95, a new record for the year. Funds managers said the recovery in the stock was expected. "What we are probably experiencing is a rotation among property stocks. The stock has lagged its peers for the past two months and is playing catch up," Mr Lee said. Analysts also pointed to strong gains by small-cap and mid-cap companies such as the Islamic insurers Takaful Emarat and Dar Takaful.

Dana Gas rose 4.8 per cent to Dh1.09 after the company said on Saturday it had discovered gas in one of its concessions in the Nile delta. The well will add as much as 30 billion cubic feet of gas to the company's reserves in Egypt. [e-mail]