Dubai’s stock market, now in the midst of a bull run, will attract
more institutional investors as its property market recovers and the UAE
remains sheltered from regional turmoil, Mark Mobius said.
“Because of political turmoil you see money coming into Dubai in search of
safety,” Mobius, who oversees about US$50bn as executive chairman of
Templeton Asset Management’s emerging markets group, said at an
interview in Bloomberg’s Dubai office on March 8. “It’s definitely going
to dawn on institutional investors.”
The Dubai Financial Market General Index surged 4.7 percent yesterday, the most since December
2009, to 1,686.66, bringing the advance from a low in January to 30
percent. Last month, the benchmark surpassed the 20 percent threshold
some consider the beginning of a bull market, and had the top monthly
gain among benchmark equity indexes worldwide.
Dubai and its neighbor Abu Dhabi, holder of 7 percent of the world’s oil reserves,
have emerged as safe havens in the Middle East and North Africa after a
wave of popular uprisings ousted leaders in Egypt, Tunisia and Libya
last year. The turmoil, which reached countries including Syria and the
Arabian Gulf’s Bahrain, barely affected the UAE, the second-biggest
Middle East economy. Dubai and Abu Dhabi are among seven sheikhdoms that
constitute the UAE.
“We’ve got all this money floating around; the first home is the biggest markets,” Mobius said. “Then they look at
emerging markets, which is why they are outperforming again, and then
they look further afield into so-called frontier. This is where the
Middle East comes in.”
Stock markets in Abu Dhabi and Dubai, home to the world’s tallest skyscraper and an artificial island shaped like a
palm frond, gained this year as companies posted improved earnings and
after Dubai said it expects two of its main companies to refinance debt
without government help. Dubai stocks tumbled 17 percent in 2011 on the
heels of the Middle East uprisings, out- performing the 49-percent drop
in Egypt benchmark.
“Dubai has become a very interesting symbol of the Middle East,” Mobius said. “We continue to add because we get more
money coming in,” he said, referring to stock markets in Dubai, Saudi
Arabia and Qatar.
Dubai’s stock market dropped in 2010 and 2011 as the emirate contended with a real-estate crash that pushed home prices
down more than 60 percent from a mid-2008 peak. Abu Dhabi extended an
US$20 bailout to Dubai in 2009 to help its businesses restructure debts.
Its state-linked companies face about US$10.3bn in debt repayments this
year, according to Bank of America Merrill-Lynch estimates.
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