Dubai’s stock index rose to the highest in almost five years as investors sought riskier assets after political tensions over Iran and Syria eased and the U.S. delayed cutting monetary stimulus. The benchmark DFM General Index gained 1.2 percent to 2,770.67 at the close in Dubai, the highest since November 2008. Gulf Navigation Holding PJSC, which owns and operates a tanker fleet, soared to the highest in more than three years, while Dubai Financial Market PJSC, the Gulf’s only publicly traded stock market, closed at the highest in a month. Emaar Properties PJSC, the developer of the world’s tallest tower in Dubai, advanced the most in more than a week.
Political tensions in the Middle East have eased after Iranian President Hassan Rouhani had a phone conversation with U.S. President Barack Obama, the highest-level encounter between the two countries since before Iran’s Islamic Revolution of 1979. Also, Syria agreed to a U.N.-led plan to destroy its chemical weapons. The Federal Reserve unexpectedly delayed Sept. 18 reducing monetary stimulus, boosting global sentiment for equities.
Investors are adding risk after the “surprise of the Fed delaying tapering, regionally continued improvement in the Syrian situation and finally some thawing of sentiment between Iran and the U.S.,” said Amer Khan, a Dubai-based director at Shuaa Asset Management, in an email Sunday.
Dubai’s economy is set to expand 4.6 percent, on average, between 2012 and 2015, more than twice the growth of the previous four years, according to government forecasts. Events like the Cityscape Global property fair in October and the possibility of Dubai winning the bid in November to host the World Expo 2020 are also boosting economic prospects.
Kuwait’s and Oman’s benchmark indexes rose 0.3 percent, while Qatar’s increased 0.5 percent. Saudi Arabia’s Tadawul All Share Index declined 0.2 percent at 1:09 p.m. in Riyadh, Bahrain’s index and Egypt’s EGX 30 lost 0.2 percent. Abu Dhabi’s measure was little changed.
In Dubai, Gulf Navigation jumped 15 percent to 57 fils. The shares have soared 91 percent since the company said last week it plans to sell a supertanker. Dubai Financial Market rose 3 percent to 2.05 dirhams, while Emaar gained 0.9 percent to 5.79 dirhams.
The emirate’s annual economic growth will be boosted by about 0.5 percentage points in the run up to the Expo and by about 2 percentage points during the World Fair should the emirate secure the bid, BofA-Merrill Lynch said in a report Sept. 23. Dubai’s growing population and its status as a haven amid political and economic unrest in other parts of the Middle East have helped boost apartment prices by 38 percent in the past 12 months, Standard Chartered Plc. said earlier this month.