Dubai trading brisk as Emaar welcomes foreign investors
Activity on the Dubai floor of the UAE Stock Exchange got off to a brisk start at the start of the week’s trading, mainly as a result of announcement by the public joint stock company Emaar Properties that it would allow expatriates and foreigners to own up to 20 percent of its capital from September 18.
Almost 76,000 shares were traded across 35 trades in four counters for Dh1.37 million. Emaar also accounted for the bulk of activity on the official bourse, with 43,000 shares moving across the counter through 16 deals for Dh0.99 million. The share opened the day promisingly at Dh23.20, being priced 20 fils higher than at its weekend close. But despite heavy trading, its price barely moved, and it actually ended the day 15 fils lower at Dh23.05.
Nonetheless, market analysts said that the prospect of expatriate investors chasing a relative small number of shares should exert upward speculative pressure on the Emaar stock in the lead-up to September 18, and beyond. "I expect yesterday's close of Dh23.05 to form the base rate below which it cannot fall," said stockbroker Zuhair Jobran Al-Kisw, quoted in Gulf News.
Walid Shihabi of Dubex Securities believed the Emaar stock’s performance might be more erratic. "While the share will likely go up initially, investors currently holding Emaar will each have their own offer levels and might sell the stock as these rungs are passed, causing the stock to undergo retractions in the medium term, due to periodical excess liquidity," he told Gulf News.
Al-Kisw and Shihabi both agreed that, at its current level, the Emaar stock is grossly undervalued.
Emaar will become the first company in the in the country to offer its shares publicly to non-UAE investors. In an official statement, Mohammed Ali Alabbar, Emaar’s chairman, explained why the company’s board decided that the time was right to amend the company's articles of association in order to allow non-UAE nationals to purchase stock. “With the holiday season intervening, we felt it better to wait until now before letting in foreigners—after the summer season, when trading activity traditionally picks up again,” he said.
Emaar is capitalized at Dh2.65 billion through 265 million shares, each of face value Dh10. The Dubai Government holds a 32 percent stake, with another 30-40 percent held by long-term investors. That leaves only 28-38 percent in the hands of speculators and active market operators.
According to Gulf News, already a month ago, some 350 expatriates resident in the UAE had already applied for and received their investor numbers' from the Dubai Financial Market. Market analysts say that the figure could have risen to as high as 500 today.
“We expect much of the initial demand to come from local investors, being familiar with the company, which carries its own comfort level,” Alabbar said. – (Albawaba-MEBG)
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