Abu Dhabi: Muhannad Dagher
The UAE stock markets are seeing a large rush of investors, individuals or institutions, to the initial public offerings of companies which has intensified during the current year as a quantum leap has been observed in their numbers and many of them have returned to increase the quota offered.
Equity experts believe that all of these deals have been successful in large proportions in terms of insurance coverage, price and equity performance in the market, mainly because the markets have managed to select companies that are distinct in terms of strong financial performance and operating businesses.
Experts confirmed through the “Gulf” platform that these experiences and the profits achieved will push investors to vigorously participate in the upcoming IPOs, which are no less important than the previous ones, and it is a golden investment opportunity for all investors .
And they said, “It is very evident among underwriting banks and brokerage firms, that subscribers have a large appetite for new offerings from existing and new investors, while investors have benefited from high pricing, high volume of liquidity and the diversity of listed companies to open up many and many options for the investor».
They stressed that investors are always looking for stability for their long-term investments, which is an advantage enjoyed by the UAE given the strong performance of its companies, with expectations that UAE markets will remain in an upward trend during the last quarter of this year, given the increase in oil prices and strong economic growth, as well as the start of the tourist season.
Illustrious proposals
Iyad Al-Buraiqi, Head of Business Development Department of Al-Dar for Equities and Bonds, confirmed that new company deals are still at their peak in UAE markets and all these deals have been successful in large proportions in terms of of underwriting coverage and in terms of quotation and performance of the share on the market.
Al-Buraiqi pointed out that the markets have managed to select distinguished companies that have strong financial performance and effective operating activity, which has led to an influx of demand from institutions and individuals.
Al-Bariqi considered these quotes a successful and effective investment for all segments due to the excellent capital returns they achieved, and perhaps doubled in a short period of days. Significant among underwriting banks and brokerage firms. Subscribers flocked in with a huge appetite for new propositions from existing and new investors.
He said: These experiences and the profits obtained will push investors to strongly participate in the upcoming IPOs, as we are promised to offer strong and huge companies during the last quarter of this year, such as.
Al-Buraiqi said such underwriting is a golden investment opportunity for all investors regardless of the allocation percentage, although sometimes it is low especially for individuals. Most underwriting demand.
He added that there is no doubt that the health and illustrious performance going through the country’s markets have a great impact and significant contribution to the successful listing of new companies, which increase the market value and depth of the market, while investors have benefited from the high prices, the high volume of liquidity and the diversity of listed companies, to open up many and many options for the investor.
Al-Buraiqi predicted that activity would increase in the last quarter of this year in light of the liquidity of the companies entering the markets and with the start of the tourist season and the World Cup, which heralds illustrious performances and strong and real investment opportunities, also in the light of the good performance of the companies present on the markets.
Quantum leap
Vijay Valesha, Head of Investment Department at Century Financial, said, “The great trend and growing demand for investment in the UAE stock market is due to many new laws and regulations which have encouraged investors to invest while increasing the cap on foreign ownership of companies; and the addition of corporate shares to global company indices such as MSCI and FTSE Russell, which has led to improved liquidity levels, in light of the listing of strong companies.
Valesha added that investors are always looking for stability in their long-term investments, an advantage the UAE enjoys given the strong performance of its companies, at a time when new IPOs in the UAE have made a quantum leap, with the arrival of the most prominent of these companies on the IPO market this year, most of which are government or quasi-government and are considered a safe haven for investment amid the energy turmoil in other parts of the world.
Valesha believed that these subscriptions reflect a smart strategy because they also elevate the status of the financial markets and are in good agreement with the plans of the Abu Dhabi and Dubai financial markets to reach a market capital of more than 6 trillion dirhams in both markets .
refuge
Valesha pointed out that high oil prices have enhanced economic growth opportunities in the UAE as the UAE market is a safe haven for investment amid the global financial activity turmoil and with the possibility of speculating that oil will receive a decent geopolitical premium in the near term, prices are likely to remain high.
He stressed that the newly listed companies had opened the door for investment and encouraged the influx of international investors as UAE share prices are still attractive, noting that since the beginning of the year the FTSE Abu Dhabi Index Market is the seventh best performing index, with a rate of 22.53%.
Valesha noted that the International Monetary Fund indicated that the UAE’s economic growth in the current year was 5.1%, 4.2% in 2023 and 3.6% in 2024, emphasizing that these numbers are high relative to global economies, which is likely to have a positive impact on listed companies in the UAE.
Valesha believes that the UAE banking sector has adopted new resilience mechanisms to deal with the effects of the global pandemic, including digitalisation, corporate governance and risk management strategies which have strengthened its actions, as the high level of digitization has reduced costs and increased profits.
The momentum continues
Financial expert Tariq Qaqish expected the tender offer activity to continue following several factors, including: economic growth supported also by high oil prices and the presence of high liquidity, in addition to government plans to support the financial markets in terms of legislation and new listings, with many government-owned companies offering public subscriptions at a time. Private companies also followed suit.
Qaqish pointed out that the quality of the companies offered has helped investors to obtain profitable returns after the listing process, and this is one of the most important factors that worried investors in the old offers, but now we are seeing high liquidity, especially in the Abu Dhabi market, and so the interest has increased, and we have witnessed the process of subscription coverage several times, which indicates that there is confidence in the markets.
He points out that in previous periods we have witnessed a distrust of the market, due to the presence of companies that have suffered financial crises, but the new laws that have intervened are considered a point of attraction for investors and have stimulated investments in the markets.
And Qaqish indicated that the former problems of some listed companies have become a thing of the past, with the current markets booming in terms of liquidity, market value of companies and the quality of these companies.
Liquidity jump
Aaron Leslie John, chief market analyst at Century Financial, had expected UAE markets to remain thriving in the final quarter of this year given rising oil prices and strong economic growth, as well as the start of the tourist season, and the growth of Qatar as host of the 2022 World Cup.
Leslie John stressed that strong demand for initial public offerings in the UAE is evidence of the interest of investment firms in the country, given the challenging international circumstances this year.
Leslie John revealed that the average daily traded value of shares in the broad index ‘FTSE Abu Dhabi Market’ increased from $313 million (1.15 billion dirhams) in 2021 to $417 million (1.53 billion dirhams) in 2022. The average daily trading volume for the year 2022 is 906.49 million dirhams, compared to 743.76 million last year.
On the other hand, the Dubai Stock Exchange index recorded a jump in the average daily value of trades to 314.8 million dirhams last year, and this increase in average volume is an indication of the inclusion of larger companies in the index.
tourism
Aron expected a big recovery in the UAE, especially with the start of the tourism season and the positive impact to come from Qatar hosting the 2022 World Cup, at a time when UAE tourism revenue exceeded $5 billion during the first half of this year.
He added: “Hotels in Dubai are already seeing a surge in demand and an earlier survey showed that the majority of travelers have chosen the UAE as their travel destination this year.