Dubai shares rose to their highest level in almost five years on Sunday. Retail investors bought heavily into small-caps ahead of the third-quarter earnings announcements.
Dubai’s benchmark advanced 1.2 percent to 2,771 points, its highest finish since November 2008. The year-to-date gains reached the remarkable 70.8 percent. Turnover surged to 1.3 billion dirhams ($354 million), the biggest daily value since a spike on June 3.
The Expo 2020 decision is coming up and later, people will start gearing up for the already announced in June MSCI upgrade. Political risk has dissipated and the outlook is positive.
Sunday’s rise suggested a break above the August peak of 2,762 points, though another daily close will be needed for confirmation. A double bottom formed by lows dating back to 2009 points the index up to the 3,500-point area in the long term.
The World Expo committee will make a decision on Nov. 27 on whether or not Dubai will win the rights to host the world’s fair in 2020. Index compiler MSCI upgraded the United Arab Emirates and Qatar to emerging market status earlier this year, which will bring in fresh foreign funds when it takes effect in June 2014.
Despite Dubai’s hefty 2013 gains, the market is still not expensive in terms of valuations, because of the positive catalysts. Analysts are expecting modest profit growth for the third quarter, however, with the hot summer having a dampening effect on some sectors.
Small-cap Gulf Navigation surged 15 percent on Sunday, leaving it up 82.1 percent since the firm’s announcement of plans to sell some ships and raise capital a week ago. It accounted for more than a third of total shares trading.
Thursday’s news that Dubai will double its land transaction fee to 4 percent did not dampen the real estate market or property stocks significantly, but the effect of the new regulation is yet to be seen.