Dubai and Abu Dhabi rise

Markets Update: Dubai's market surges after a string of good news from property companies, and a presidential decree increasing salaries of federal workers brings gains for banks.

The Dubai Index rose 1.8 per cent to 1,404.34. Lee Hoagland / The National

Dubai's market yesterday rallied to its highest level since October after construction companies announced a slew of new deals, while a presidential decree to raise salaries sparked sharp gains at banks.

The Dubai Financial Market (DFM) General Index rose 1.8 per cent to 1,404.34, while the Abu Dhabi Securities Exchange General Index increased 1.1 per cent to 2,472.95. Trading activity also staged a recovery, with the value of stocks changing hands on the DFM its highest since October.

Property companies such as Arabtec and Drake & Scull International (DSI) lifted the Dubai index higher, while a Government decision to increase the salaries of federal Government employees by 35 to 100 per cent sparked a rally among banks, led by First Gulf Bank, National Bank of Abu Dhabi and Abu Dhabi Commercial Bank.

"That's very positive for retail investors," said Rami Sidani, the head of Middle East investments at Schroders. Banks would be the "main beneficiaries of new liquidity coming into the system," he said.

A Dh10 billion fund to help low-income families struggling to pay their loans would help banks reduce numbers of bad debts, Mr Sidani added.

DSI rose 4.7 per cent to 83.8 fils after the construction company said it had won a Dh200m contract for engineering works at a university in Kuwait, while Arabtec's shares gained 3.4 per cent to Dh1.51 each after its new facilities management subsidiary won a contract to service a property in Dubai Marina.