Shares in Dubai rose to the highest level in more than two weeks following a record close for U.S. stocks last week. Qatari shares also advanced.
The DFM General Index (DFMGI) climbed 2.5 percent to 3,984.64 at 12:22 p.m. local time, its highest since Dec. 9. Qatar’s QE Index and Abu Dhabi’s ADX General Index both added 1 percent, and Saudi Arabia’s Tadawul All Share Index advanced 0.3 percent. The gauge has jumped almost 20 percent since a recent low on Dec. 16.
Data last week showed the world’s largest economy grew at the fastest pace since 2003 in the third quarter, spurring the Standard & Poor’s 500 Index to its highest close on record on Dec. 26. Dubai’s benchmark index recovered from a bear market with a 13 percent surge in the last five trading days, after markets in the six-nation Gulf Cooperation Council collapsed amid plunging oil prices.
“Since we are dollar-pegged economies, we are bound to benefit from a stronger U.S.,” Ahmed Shehada, head of advisory and institutions at NBAD Securities LLC in Abu Dhabi, said by phone. “U.S. markets are seeing new highs on positive macro-economic perception. A lot of hedge funds, active money managers, when they see better performance in their developed market portfolios, tend to take a bit more risk with the emerging markets to enhance returns.”
The estimated 12-month price-to-earnings ratio of the DFM General Index rose to 12.4 today from 9.7 on Dec. 17. That compares with 11.1 for the MSCI Emerging Markets Index.
“We are back from the dead really, and we are seeing new foreign flow of money which gives us comfort that the market is still attractive in terms of valuations,” Shehada said.
Source: Bloomberg
