Bourses in the United Arab Emirates outperformed the region on Wednesday as Dubai developer Emaar Properties rebounded after profit-taking and Abu Dhabi’s Waha Capital jumped after securing $575 million in fresh funding.
Dubai’s main index rose 1.1 percent to a three-month closing high of 5,172 points as shares in Emaar gained 2.2 percent. The stock had dropped 3.0 percent on Tuesday after surging 13.7 percent in the two previous sessions.
Emaar, the emirate’s largest listed developer, plans to float its malls unit this month in a deal likely to raise 8 to 9 billion dirhams ($2.18-$2.45 billion) and will reserve 10 percent of the offered shares for its own shareholders.
The company reiterated on Wednesday that only investors holding its stock at the end of trading on Sept. 10 would qualify for priority allotment.
Shares in bourse operator Dubai Financial Market, which may benefit from higher turnover thanks to the IPO of Emaar’s subsidiary, jumped 5.0 percent.
“The mood is good in the UAE equity markets,” said Sebastien Henin, head of asset management at The National Investor in Abu Dhabi. “The Emaar unit's IPO was a pleasant surprise for investors.”
Emaar had initially announced plans for the IPO in March but without a clear timeline. On Sunday, it said it would float the unit in September.
Abu Dhabi’s index added 1.0 percent on the back of large lenders First Gulf Bank and Abu Dhabi Commercial Bank, which rose 2.2 and 2.0 percent respectively.
Investment firm Waha Capital jumped 3.4 percent after announcing a hedging deal on half of its shares in U.S.-listed aircraft leasing company AerCap.
Waha Capital said the deal would provide it with additional funding of $575 million, which would be used to partially repay debt and fund new investments.
Qatar’s bourse edged up 0.7 percent, recovering further from a 3.0 percent drop last Thursday, when funds tracking MSCI’s frontier market index sold local stocks en masse as part of gradual rebalancing which followed Qatar's upgrade to emerging market status in May.
Mobile phone operator Ooredoo, which tumbled 10 percent during Thursday’s sell-off, was the main support and rose 2.9 percent.
However, with the recovery almost complete, the market may stall, said Henin from The National Investor.
“It’s a kind of wait-and-see situation,” he said. “In the coming days we will have the report from FIFA and in case there is bad news the market might suffer.”
FIFA is investigating its earlier decision to award the 2022 soccer World Cup to Qatar following allegations of graft, which the Doha government denies. Fund managers think Qatar remains very unlikely to lose the hosting rights, but the issue could cause concern in the market.
Saudi Arabia’s market edged up 0.1 percent. Petrochemical giant Saudi Basic Industries was the main support, adding 0.9 percent.
Banks continued to pull back following the central bank’s decision earlier this week to cap fees related to consumer lending. The banking sector index slipped 0.3 percent.
Insurance companies were the best performers with four stocks - Saudi Indian Company for Cooperative Insurance , Salama Cooperative Insurance Co, Arabia Insurance Cooperative Co and Sanad Cooperative Insurance and Reinsurance - surging their daily 10 percent limits.
Rating agency Standard & Poor’s said in a report on Wednesday that it believed “the insurance price war that raged in Saudi Arabia during 2012-2013 has now largely ended, although competition to win large, prestigious corporate accounts remains intense.”
Market tariffs for the sector’s principal lines of group medical and motor insurance have risen by an average of some 20 percent so far in 2014, it said.