Dubai's DP World surged to a 27-month high on Wednesday after the ports operator sold a 75 percent in its Australian operations for $1.5 billion. The firm's shares rose 6.3 percent to their highest close since September 25, 2008. "The deal seems EPS (earnings per share) accretive," said Shehzad Janab, Daman Investments chief investment officer.
"The fact it has been able to sell assets in the current environment should be seen as a positive, but for people following DP World the deal is not a surprise." DP World will sell majority control in its Australian operations to private equity firm Citi Infrastructure Investors (CII) as it seeks to reduce debts, with a $3 billion revolving credit facility maturing in 2012. It will continue to manage the Australian facilities on the new owner's behalf. "DP World's prize asset is Jebel Ali, which generates the bulk of its earnings, while its growth assets such as its Cochin port and Vietnam are still there," said Janab.
DP World was excluded from parent company Dubai World's $25 billion debt restructuring, while in November Dubai officials said the emirate may sell off assets as the it seeks to reduce an estimated $115 billion debt pile, mainly held by government-owned companies.
"DP World is making money and is a play on regional and global growth and I would expect it to continue to be ring-fenced from Dubai asset sales until prices improve and I don't see that happening any time soon," Janab added.
Dubai's Emaar Properties fell 1.4 percent following a report by Indian media that the developer's Indian unit lost a $41 million court case in India. "The case isn't a big deal, but the pressure on Emaar's stock was more pronounced given the low volumes in the market," said Tarik Lotfy, Arqaam Capital Head of MENA equities.
Dubai's index fell to a new 15-week low in muted trade. "Institutional trading has largely dried up due to seasonal issues," added Lotfy. "We may have drifted lower over the past couple of weeks, but I'm bullish for next year and expect interest to return and sentiment to improve over the course of Q1 - UAE markets are under-owned, so risk is to the upside."
In Egypt, Orascom Telecom fell 0.5 percent after Russian mobile operator Vimpelcom said it wanted to renegotiate the terms of a $6.6 billion deal that includes buying OT assets. New terms may be the only way to save the deal after objections from a Vimplecom shareholder.
Saudi Electricity Co rose 1.4 percent a two-month high after the utility said it may involve private firms in building more power plants, helping Saudi Arabia's index edge up to a new seven-month peak. Saudi shares have been little moved by kingdom's record budget for 2011, announced on Monday.
"Saudi Arabia's market hardly reacts to the budget, but in the long term the impact will be positive," said Shakeel Sarwar, Sico investment bank head of asset management. "Next year, we'll see infrastructure spending having a trickle impact on many sectors of the Saudi economy."