The benchmark stock index gauge of Dubai has increased to a level which is the highest in last 3 years as the investors sought cheap valuations amidst a situation when the emirate is experiencing an economic recovery. The benchmark stock gauge DFM General Index jumped up by 1.9% to 2,168.80, marking its highest value since November, 2009. In 2013 till date, the measure has gone ahead by 34% and thereby the Dubai stock exchange has become the best performing index in the entire Persian Gulf.
According to the Fund Manager of Shuaa Asset Management, Amer Khan, valuations of Dubai stocks were very undemanding, if compared to the regional markets. The scenario is pretty similar even on today’s date. This factor is pretty apparent in the banking and real estate sectors currently.
The stocks in Dubai trade at a price to book ratio of 0.9 times. This is lower compared to that of Tadawul All Share Index, the benchmark stock gauge of Saudi Arabia. It is the biggest bourse in the Persian Gulf and the price to book ratio is 1.9 times for it. Incidentally, the 2nd biggest sheikhdom in the UAE is currently recovering from the debt crisis and property crash. The recovery is being helped by the rebound that the retail, trade and tourism industries have experienced. The three state linked companies refinanced or paid a debt worth $3.75 billion in 2012 and this helped to boost the investor confidence in the emirate.
The economy of Dubai is expected to expand 4.6% on average between the 3 years: 2012 and 2015. This is twice than the growth of the previous 4 years, as far as the Government forecasts as concerned. The Government of Emirate has already stated that it is committed to honor all the financial obligations on time as it redeemed bonds worth 3.3 billion Dirhams in last April.
Among companies, Dubai Islamic Bank, which is the biggest Shairah-compliant lender in the United Arab Emirates, went ahead by 3.1%. The first quarter profits of the same defeated the estimates and each share is currently priced at 2.99 Dirhams. This is the highest price for its shares since October, 2009. The biggest budget airline in the region, Air Arabia PJSC, experienced a surge of 5.8% and each share is currently priced at 1.03 Dirhams, marking the highest figure in last 3 years.