Real estate firms lead UAE bull run

Dubai: United Arab Emirates shares advanced for a third day, led by real estate companies, as investors speculated economic growth in the Gulf region will benefit from higher oil prices.

Emaar Properties, the Middle East's biggest property developer, climbed for a second day after HSBC Holdings Plc initiated coverage of the stock with an "overweight" recommendation. Sorouh Real Estate Co. jumped to a record. Air Arabia rose to the highest in almost three weeks after launching a new route.

"Gulf economies are expected to outperform other emerging markets and oil crossing the $100 has definitely sent a positive psychological signal," Rami Sidani, vice-president at Shuaa Capital PSC, said yesterday.

Shuaa manages the equivalent of $1.2 billion. "Coverage on stocks such as Emaar helped support the market after the share was given a fair value at double its current price."

The Dubai Financial Market General Index added 0.5 per cent to 5,893.90, bringing its three-day increase to 3.3 per cent. The Abu Dhabi Securities Market Index climbed 1.1 per cent, while Oman's Muscat Securities Market 30 Index rose 1.2 per cent.

The UAE's economy will grow at 7.2 per cent, while Oman's economy will expand at 5.5 per cent in 2008, according to the median estimates of seven economists polled by Bloomberg in December. That compares with Brazil economic growth of 4.5 per cent this year, according to a Bloomberg survey.

Crude oil futures, which jumped as high as $101.32 a barrel in New York on Wednesday, have climbed 16 per cent from this year's low on February 7.

Emaar rallied 4.6 per cent to Dh12.65, bringing its two-day gain to 11 per cent. HSBC set its 12-month share-price estimate at Dh23 ($6.23).

"Emaar is trading at very attractive levels compared to other property developers here," Sherif Abdul Khalek, head broker at Al Futtaim HC Securities, said in a telephone interview from Dubai.

The stock trades at 12 times estimated earnings, according to data compiled by Bloomberg News. That compares with multiples of 21 for Sorouh and 23 for Deyaar Development.

Sorouh, a property developer controlled by the Abu Dhabi government, rose 1 per cent to Dh10.3. The stock has surged 6.4 per cent in its three-day rally.

Air Arabia PJSC advanced 1.4 per cent to Dh2.11, the highest since February 4. The UAE-based low-cost airline will fly to Kozhikode, India, from its Sharjah base three times a week starting February 26.

Five of the six benchmarks in Gulf markets operating and tracked by Bloomberg News advanced yesterday. Qatar's Doha Securities Market Index added 0.1 per cent, while the Kuwait Stock Exchange Index fell less than 0.1 per cent.

The Bahrain All Share Index increased 0.4 per cent, bringing the four-day advance to 2 per cent. Saudi Arabia's market was closed yesterday for the weekend.

The following stocks also rose or fell in Gulf markets. Al Ahlia Holding Co. gained 2 per cent to 260 fils, the highest since February 13. The Kuwaiti investment firm said full- year net income surged more than fivefold to 36.4 million dinars ($133 million).

Arabtec Holding rose 1.7 per cent to Dh11.9. Arabtec Construction Co., a wholly owned unit, won a Dh360 million ($98 million) contract to build a 421-room four-star hotel by the Abu Dhabi National Exhibitions Co.

Aref Energy Holding climbed 7.6 per cent to a record 355 fils. The Kuwaiti energy investment firm said it will sell 645 million shares to existing shareholders at 105 fils apiece.