Dubai share prices surged by more than 10 percent on Monday boosted by Abu Dhabi's surprise decision to bail out the Dubai government with a 10-billion-dollar handout. Bullish sentiment on the Dubai Financial Market, which closed 10.37 percent up at 1,871.2 points, followed gains of 3.33 percent and seven percent in the previous two days of trading.
The Dubai government is to use 4.1 billion dollars of the Abu Dhabi funds to pay for bonds maturing on Monday for debt-laden real estate giant Nakheel. Despite the sharp recovery, however, the DFM index remains down 10.6 percent since November 25, when Dubai announced it was seeking a six-month freeze on repayments of Dubai World's burgeoning debt.
The DFM closed at 2,093.16 points on the 25th, before the announcement was made later that day, which rocked stock markets in the Gulf and beyond amid fears of a looming debt default. The most pressing concerns hanging over Dubai World were focused on its subsidiary Nakheel, which owes 3.5 billion dollars plus returns in Islamic bonds that mature on Monday.
Those concerns were relieved today with the announcement of Abu Dhabi's financial rescue package. The Abu Dhabi Securities Exchange also performed well on Monday, rising 7.93 percent to close 207.23 points up at 2,821.12 points. Other regional markets posted gains on Monday, with Saudi Arabia's exchange, the Arab world's largest, gaining 129.10 points, or 2.14 percent, to close at 6,155.03 points.
Kuwait's exchange registered a 0.88 percent increase, rising 60.1 points to close at 6,908.2. Qatar's market rose by 2.6 percent to close at 7,176.35 points, while the stock markets in Oman and Bahrain gained 2.64 and 1.59 percent respectively on Monday to close at 6,291.35 points and 1,446 points.