Gulf News - 21/5/2006

Dubai The Dubai stock market received a boost yesterday after real estate giant Emaar Properties announced that it would buy back some of its shares.

In a statement posted on the Dubai Financial Market (DFM) website, the company said it planned to "commence the shares buyback scheme in accordance with the new law and after seeking the required approval from the Emirates Securities and Commodities Authority (Esca)."

Emaar, however, did not specify a time for or quantity of the buyback, but UAE fund managers and brokers say the company may purchase around two or three per cent of its shares, possibly within a few weeks. The announcement sparked hope that other UAE companies would follow suit and lift bourses.

The benchmark DFM index firmed up to an intra-day high of 508.81 points before closing at 484.93, up 0.39 per cent from previous day's closing.

In Abu Dhabi, the index closed up 2.72 per cent (92.94 points) at 3,516.05 points.

On the DFM, Dubai Islamic Insurance and Reinsurance Company was the biggest gainer, closing 6.97 per cent higher at Dh37.40.

Emaar shares leapt to an intra-day high of Dh13.25 after the buyback announcement, before retreating to a close of Dh12.60, up 8.15 per cent. Mortgage company Amlak Finance closed up 3.26 per cent at Dh7.80.

Other gainers on the DFM included Gulf General Investment Company and Shuaa Capital.

The day's losers included Global Investment, Oman Insurance, du, Islamic Arab Insurance and Tabreed.

"What happened was a good example of what the reaction will be if companies announce share buybacks," Mohammad Yasin, general manager at Emirates Securities, told Reuters.

Earlier this month, the UAE eased restrictions on share buybacks, hoping to encourage companies to add support to crashing stock markets. The new rule would allow companies purchase up to 10 per cent of their own stock, more than analysts believed Emaar, with a capitalisation of about Dh74 billion, would buy. "Because of the size of Emaar, 10 per cent would be too much," said Hany Hussain, fund manager at Mashreqbank. "I don't think Emaar can put Dh10 billion into the market given its internal liquidity."

In the Abu Dhabi Securities Market, the two biggest gainers Union Cement closed up 9.86 per cent at Dh5.57 and Abu Dhabi Islamic Bank up 9.38 per cent at Dh45.75.

Yasin said Emaar may buy shares at 10 per cent higher than their current price, which he said would bring the company's price to earnings ratio more in line with Dubai's market.

Trading session halted

The trading session was suspended at 10:08am and DFM has taken the appropriate measures and successfully employed the back up system in 45 minutes. DFM extended its normal trading hours by 45 minutes to compensate for the down time to its system.

DFM extended its apologies to traders for the technical failure. DFM has concluded an intensive study to upgrade and enhance the entire trading system, to continuously improve the service it offers to investors.