Dubai and Abu Dhabi stock markets on Thursday rallied to their highest levels since November and January, after the Dubai Government announced its decision to back the debt of Dubai World and its property-development subsidiary Nakheel. Benchmark indices for the Dubai Financial Market (DFM) and the Abu Dhabi Securities Exchange (ADX) advanced by 4.3 per cent and 1.2 per cent respectively, led by the real estate and financial services sectors.
In Dubai, investors flocked to Emaar and Arabtec shares, pushing the Emaar up by 8.8 per cent and Arabtec up by 6.9 per cent. Shares of the listed DFM security climbed by 7.8 per cent. In Abu Dhabi, Aldar gained 5.8 per cent and Sorouh added 6.7 per cent. Abu Dhabi Commercial Bank, RAKbank and Union National Bank all gained more than 5 per cent. The debt restructuring proposal, still awaiting the approval of the creditors committee, will see Dubai pump $8 billion (Dh29.4 billion) into Nakheel and $1.5 billion into Dubai World using $5.7 billion remaining from the Abu Dhabi fiscal support package in addition to “internal Dubai Government resources,” according to a statement released yesterday. More significantly, Dubai will convert the $8.9 billion it is owed by Dubai World and the $1.2 billion owed by Nakheel into equity. Since the government is already a full owner of both, this means the debt will be written-off.
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