Dubai: UAE shares rebounded strongly on Tuesday after bellwether stock Emaar Properties received a ‘buy’ against its earlier ‘neutral’ rating from Egyptian investment bank EFG-Hermes, which raised its 12-month target price to Dh10.1 from Dh6, a jump of almost 68 per cent.
The share price of the region’s biggest property developer surged the most in more than four months, climbing 6.32 per cent to end at Dh8.24.
Dubai’s benchmark stock gauge DFM General Index rose 3.23 per cent to 3,805.16, almost erasing the loss of the previous two days. In the capital, the ADX General Index was up 1.28 per cent to 4,585.81.
“Our bullish stance is underpinned by the MSCI inclusion and exuberance around Expo 2020,” analysts Jan Pawel Hasman and Kareem Ghaly wrote in a research note on Tuesday.
“Emaar represents a pure exposure for many investors who want to play these two themes and the increase in liquidity is supporting asset price appreciation.”
The news about Emaar’s target price being raised indicates there is a potential upside for the stock in the months ahead, said Tariq Qaqish, head of asset management and fund manager at Dubai-based Al Mal Capital.
“The other thing, which is also an indication, is the fact of MAF [Majid Al Futtaim] reporting good numbers for retail,” he said. “This would mean that Emaar also could deliver more positive numbers for the same segment.”
MAF recorded a 10 per cent increase in revenue last year, according to a statement by the company on Monday.
Positive recommendation
This positive recommendation comes on the back of Emaar launching its Rasha villa project in Dubai’s Arabian Ranches on Sunday and the company appointing a new Group CEO on Monday.
However, the correction seen in the local markets in the past two days that was in line with the global rout in equities does not necessarily mean the correlation is back.
“I don’t see correlation coming back to significant effect,” said Qaqish. “At this stage, we are less correlated. Only if we see a big change in policies such as US Fed decisions or continued big drops or swings, definitely we will be going back to the correlation matrix.”
Sebastien Henin, portfolio manager of The National Investor thinks that “we shouldn’t be exposed or only a minimum to this QE tapering. We have seen in the past quarters only small amounts [being taken off the market due to tapering concerns].”
Among the high turnover stocks in Dubai were Arabtec, Gulf Finance House, Union Properties, Dubai Islamic Bank and Deyaar Development, which gained 0.47 per cent, 1.97 per cent, 3.36 per cent, 6.21 per cent and 2.33 per cent respectively.
In Abu Dhabi, Waha soared 8.32 per cent, while Aldar Properties and Ras Al Khaimah Properties closed 2.50 per cent and 2.61 per cent higher. Dana Gas rose 1.06 per cent.
