Dubai, March 26: Dubai and Abu Dhabi stocks surged on Thursday following Dubai government’s debt proposal for creditors of Dubai World.
The emirate unveiled a plan on Thursday to restructure state-owned Dubai World’s $26 billion debt. Dubai promised to recapitalise Dubai World and Nakheel property unit with $9.5 billion aid through its Dubai Financial Support Fund.
“It’s better than what was expected,” Chief Executive Officer of Shuaa Securities Mohammed Ali Yasin said, adding: “The Dubai government is going to become the owner of debt; unsecured debt will become sovereign debt.”
Dubai’s bench market index jumped by 4.3 per cent to 1,845 points, its largest gain since December 14, while in Abu Dhabi the ADX main index climbed 1.1 per cent to 2,904 points, its highest close since November 25, the day Dubai World asked for a debt standstill.
“This is a relief rally that a solution is in hand,” said Keith Edwards, head of asset management at the Doha-based investment company The First Investor. “The offer has to be positive — it has removed some uncertainty, which has been holding investors back. It is a solution to short-term problems, but it does not solve Dubai’s long-term structural problems.”
Emirates NBD and Abu Dhabi Commercial Bank climbed 3.4 and 5.8 per cent respectively. Both lenders are part of a Dubai World creditors’ committee.
“UAE banks are winners here, given that they do not have to take debt provisions to Dubai World exposures, that had previously been expected to be taken through profit and loss during financial year 2010,” Ian Munro, head of research, MAC Capital, wrote in a research note.
Real estate stocks surge, tracking gains in Emaar Properties, which jumped 8.8 per cent. Aldar Properties rose by 5.4 per cent and Sorouh Real Estate added 6.8 per cent.
–Agencies