Dubai bourse rose to a new five-year high on Wednesday with blue chip Emaar Properties gaining after it approved a bond conversion that will result in fewer new shares than expected.
The property developer responded to requests from convertible bond holders by agreeing to issue 18.7 million new shares; a tiny fraction of the company's 6.09 billion shares outstanding.
"I think this is a good deal - it allows some interest savings and it shows the management is flexible," said Sanyalaksna Manibhandu, senior analyst at NBAD Securities.
Emaar climbed 2.3 percent to 7.25 dirhams ($1.97), halting a two-session drop, and was the main support for the market.
A full conversion of the $500 million bond that Emaar issued in 2010 would result in dilution of only 2.2 percent in the stock price if it occurred at 4.38 dirhams per share, analysts at NBK Capital earlier estimated in a note.
"Overall the trend remains bullish and calls for continued upward rallies to 8.80 dirhams and then 10.50 dirhams in the medium to long term," NBADS said in a note.
Other real estate shares jumped: Deyaar Development and Union Properties climbed 10.7 and 6.5 percent respectively.
Deyaar said on Tuesday its Fairview Residency project was nearing completion with handover scheduled for March 2014.
Dubai's index rose 2 percent to a new five-year high and extending 2013 gains to 97.7 percent.
"Looking into 2014, there are some catalysts at play which should attract buyers and will support the overall market in the medium-term," said Amer Khan, fund manager at Shuaa Asset Management.
In May, index compiler MSCI will implement the UAE's upgrade to an emerging market index, which will result in additional inflow from index-tracking funds.
Abu Dhabi's measure slipped 0.2 percent, easing off Tuesday's 63-month high.
In Saudi Arabia, the index climbed 0.3 percent to a fresh five-year high.
Food firm Savola Group jumped 4.2 percent and banking shares also supported gains with Saudi Investment Bank and Al Jazira Bank up 3.1 and 2.7 percent respectively.
In Oman, the benchmark climbed 0.3 percent to a 16-week high as investors positioned for year-end earnings and dividends.
Banks lead gains. Shares in Bank Muscat and National Bank of Oman each rose 1.9 percent.
"People are positioning for the dividends, it's a high yield market where valuations are also reasonable," said Kanaga Sundar, Gulf Baader Capital Markets' head of research.
"We're overweight on industrial and commodity players that have the capacity to ramp up utilisation levels. Banks have attractive valuations and telecom operators will pay good dividends."
Oman's measure is trading at forward price-to-equity ratio of 10.58 times, compared to Dubai's 15.02 and Saudi Arabia's 14.73, Thomson Reuters data showed.
On Monday, BP announced it would drill some 300 wells for gas under the Omani desert over the next 15 years in a $16 billion project that may give a significant boost to the economy, which is about $80 billion in size.
Long-term beneficiaries of the massive project will be banks and construction-related firms, Sundar said.
Elsewhere, Kuwait's measure slipped 0.4 percent, extending declines to hit its lowest finish since Sept. 11.
Late on Wednesday, National Bank of Kuwait, the country's biggest commercial bank, said its chief executive Ibrahim Dabdoub would retire after NBK's next annual general meeting. Its shares were flat.
Qatar's bourse was closed for a National day holiday and will resume trading on Sunday Dec. 22.