Arabtec spurs Dubai index to buck Emerging Markets rout

Dubai: Dubai’s benchmark stock index on Tuesday bucked the emerging markets rout helped largely by an Arabtec Holding — whose surging share price notched up its biggest gains since September — even as trading was suspended at 1.30 pm after some brokers complained of a technical malfunction they said prohibited them from trading.

Over the last four days, the region’s biggest construction company, which built the world’s tallest tower and has been on contracts-winning spree — the most recent being this week’s Aabar Investments deal worth Dh22.4 billion deal for 37 towers in the capital and Dubai — has jumped 17 per cent, taking its year to date gains to 74 per cent.

Bank of America Merill Lynch last month recommended investors buy the construction stock, revising its price target to Dh3.6 from its earlier Dh1.98. Arqaam Capital also has a ‘buy’ rating on the stock. The DFM General Index rose 1.04 per cent to close at 3,812.15 even as the majority of stocks declined. Real estate stocks had a mixed day with Union Properties up 2.52 per cent while Emaar Properties and Deyaar Development were down 0.63 per cent and 3.10 per cent respectively.

“We do believe that market has moved very fast and we would like to see healthy corrections to meet the expectations of investors,” said Tariq Qaqish, head of asset management at Al Mal capital, Dubai. “Valuations of some companies 2013 are too high and their performance will not be repeated in 2014; so, investors should be watching. In 2013, some of the companies have recorded one-off profits, which will not be repeated this year. They need to look [forward] and distinguish between core business and one-off profits.”

Qaqish is not buying Arabtec at the current level. He disagrees with the model of analysis that takes into account the enterprise value to backlog, which is showing that it is cheap.

“They should instead take a mix of discounted cash flow and other valuation metrics as the [Arabtec] projects are expected to start this year through 2020,” he explained.

In Abu Dhabi, the stock measure closed lower for the second straight day as investors booked profits on Waha Capital shares.

Waha Capital was among the most active stocks to have lost big. Earlier in the day, the investment firm declared a 43 per cent rise in its annual net profit to Dh306.4 million.

However, the share price decreased 5.86 per cent to end at Dh2.73.

The ADX General Index closer 0.36 per cent lower at 4661.65 as 18 stocks declined, 13 advanced and five remained flat.

On Tuesday’s suspension of trade 30 minutes before close, a DFM spokesman told Gulf News that it “was not widespread as only a few brokers complained of not being able to trade.”

There were will be no cancellation of trades that happened prior to 1.30pm, he said, addding, the exchange is working on it and hopefully the problem will be solved before the start of trading tomorrow.