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Dubai stocks climb after major slump |
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3/31/2006 1:42:24 PM |
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DUBAI: Dubai's main stock index rose above 700 points yesterday for the first time since a mid-March slump, with cash from heavily oversubscribed share issues flowing back to drive the recovery.
Simultaneous initial public offerings have attracted demand of more than $180 billion from investors, creating a liquidity crunch that helped trigger Dubai's plunge of almost 12 per cent on March 14, when shares fell across the world's biggest oil exporting region.
The index ended 3.24pc up at 698 points, its highest close since March 12, having hit an intraday high of 716, with brokers saying it had breached a key resistance level, setting the stage for a rally.
"The market broke that (resistance) level just under 700 points and it looks very positive," said Mohamed Alami of Naeem Brokerage.
"We needed high volumes to break the level." Turnover jumped 25pc to 4bn dirhams ($1.09bn). Most Gulf Arab markets are pulling gradually out of their steepest dive in years but for widely differing reasons. Saudi shares are rallying in response to regulatory changes designed to support prices, and smaller markets are taking their cue from Riyadh. But Kuwaitis are worried about the profits of firms that rely on investment income and sentiment is fragile.
In Dubai liquidity has been the key issue, especially since the early March IPOs of mortgage lender Tamweel and Emirates Integrated Telecommunications Company (EITC).
"Shareholders have begun to receive money back from Tamweel and have started investing it," said Hany Hussein, portfolio manager at Mashreqbank.
"Liquidity is flowing back..." The Tamweel IPO was nearly 500 times oversubscribed, drawing more than $74bn in bids, while EITC, the UAE's second telecom operator, saw its IPO 167 times oversubscribed, with interest totalling $109bn.
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