The UAE can become the listings and equities trading hub for the Middle East by "aggressively" reaching out to entice companies in other territories, particularly in Africa, to list on the country's bourses, Mark Mobius, Executive Chairman of investment firm Templeton Emerging Markets Group said.
Mobius, who helps oversee the Franklin Templeton’s $29 billion global emerging markets portfolio, said that the UAE has the tax and "numerous other advantages" that should help it lure companies from far and wide.
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Initial public offerings, IPOs, have dried up recently on regional stock exchanges, including the Dubai Financial Market and Abu Dhabi Securities Exchange. Softer economic conditions across the Arabian Gulf have dented investor appetite for new share offerings, while firms looking for higher valuations for their businesses have put listing plans on hold.
GCC stock markets held three IPOs in the second quarter of 2017, compared with two in the same period a year earlier, while proceeds generated from the capital market listings decreased 38 percent for the period.
Equities capital market activity is expected to get a boost in the UAE with some large IPOs in the pipeline. Dubai-based Emaar Properties, the biggest publicly-traded developer in the country, announced plans to float shares in its real estate development business confirmed at 20 percent, according to Reuters.
Emaar Development was valued at 24.1 billion dirhams ($6.56 billion) as of September, Emaar said in a bourse statement.
On the other hand, Abu Dhabi National Oil Company, ADNOC, may also sell shares in its distribution unit, which includes more than 300 service stations throughout the UAE. The company could be valued at up to $14 billion, making it potentially the largest transaction on local equity markets since the Dubai’s DP World listing in 2007, according to Bloomberg.
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Such IPOs by local companies are key to the revival and development of local equities markets, according to Mobius, who said ADNOC’s potential listing is an example of "the kind of thing they [the UAE] could do" to unlock value.
Regional stock markets have missed out on this year's equities rally in both developed and emerging markets. The US's S&P 500 Index has hit multiple highs and has gained more than 14 percent this year, while MSCI's Emerging Index has added more than 30 percent over the same period.
Stocks in Dubai, by contrast, have risen by just over 3 percent, with Abu Dhabi stocks down about 1 percent for the year. Saudi Arabia’s Tadawul All Share Index has also declined more than 3 percent.
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