Dubai loan sends markets soaring

Dubai: Abu Dhabi's surprise $10 billion (Dh36.7 million) support of neighbour Dubai lifted most Gulf Arab bourses to milestone gains yesterday.

Dubai's debt restructuring also pushed world stocks higher, oil pared early losses and the dollar retreated as risk appetite improved globally.

Dubai will use the cash injection to keep conglomerate Dubai World afloat until April, with $4.1 billion used to repay affiliate Nakheel's sukuk, which matured yesterday.

Abu Dhabi's benchmark climbed 7.9 per cent in its biggest gain since at least April 2007, while Dubai's index jumped 10.4 per cent, its largest rise for 14 months.

"We're in the process of a knee-jerk reaction — there was a violent move on the downside and now we're seeing the equivalent move upwards," said Julian Bruce, EFG-Hermes director of institutional equity sales.

"Dubai has passed the initial hurdle of Nakheel's bond, now we need further clarification on the exact proposals for restructuring of Dubai entities and how they will be treated."

Fifteen Dubai stocks rose more than 14 per cent, with 15 per cent the maximum daily move.

Volumes slumped to a two-week low as most stocks hit limit-up in early trading as investors were then unwilling to sell in expectation of more gains this week.

In Abu Dhabi, 34 stocks ended more than 9 per cent higher, with moves limited to 10 per cent.

"We had such a significant correction, people owning stocks are now happy to hold on to them or wait to sell at higher prices," said Ali Khan, managing director and head of brokerage at Arqaam Capital. "There is momentum... and this news helps put a floor on the market."