Foreign cash to boost DFM profit

Dubai: The Dubai Financial Market (DFM), said on Sunday fourth-quarter profit could come in at the top end of forecasts after foreign buyers unexpectedly boosted trading in October.

DFM shares surged as much as 12 per cent after chairman Eisa Kazim told Reuters the firm expected a 2007 profit close to Dh1.2 billion ($326.8 million), a jump of 50 per cent from 2006 net income of Dh797.5 million.

The annual forecast would indicate a fourth-quarter profit of Dh335 million, according to a Reuters calculation based on nine-month profit of Dh865 million reported by the company. DFM made Dh117 million in the third quarter.

Rally trigger

"That is the type of news that would definitely trigger a rally," said Hashem Montasser, head of regional asset management at Cairo-based investment bank EFG-Hermes.

EFG-Hermes expected the DFM will make Dh1.1 billion this year, Montasser said. "The DFM is a reasonably simple formula, it derives most of its profit from fees and commissions. So as long as volumes go up you would expect it to do quite well," he said.

Turnover on Dubai's main index reached Dh23.25 billion in the the week ending November 1, up 35.6 per cent from the prior week, exchange data showed. "We predicted between Dh1-Dh1.2 billion," Kazim said of his expectations for 2007 profit. "If the volumes are like October, it will be closer to Dh1.2 billion," he said.

"The UAE has got a lot of interest from foreign institutional investors in the last two weeks," Montasser said. Non-Arab investors were the only net buyers in Dubai last week, when the benchmark rallied 7.6 per cent to its highest close in 18 months, exchange data showed.

Overseas investment

Stock markets across the Gulf Arab region are looking to attract foreign investment after a crash last year which saw four of the region's seven bourses, including Dubai's, losing more than 35 per cent of their value.

Dubai's stock exchange has held roadshows in London and is planning one in New York this month.

DFM's nine-month profit included profit from operations of Dh397 million, including Dh468 million in proceeds from its $435 million share sale last November.

DFM's parent Borse Dubai has agreed to take over Nordic exchange operator OMX with Nasdaq .