3/3 © Reuters. FILE PHOTO: A girl walks by way of the Dubai Monetary Market after Joe Biden gained the U.S. presidency, in Dubai, United Arab Emirates November 8, 2020. REUTERS/Christopher Pike/File Photograph 2/3 By Hadeel Al Sayegh and Saeed Azhar DUBAI (Reuters) – Dubai’s inventory market is about for an additional delisting, elevating a
© Reuters. FILE PHOTO: A girl walks by way of the Dubai Monetary Market after Joe Biden gained the U.S. presidency, in Dubai, United Arab Emirates November 8, 2020. REUTERS/Christopher Pike/File Photograph
By Hadeel Al Sayegh and Saeed Azhar
DUBAI (Reuters) – Dubai’s inventory market is about for an additional delisting, elevating a query mark over the way forward for one of many Gulf’s main exchanges, which was launched twenty years in the past.
A $595 million bid to take DAMAC Properties non-public by the agency’s founder Hussain Sajwani is the newest blow to the alternate, even because the Gulf metropolis state’s property market confirmed indicators of life within the first quarter.
“It’s not that Dubai is changing into much less enticing. Alternate options have gotten extra enticing,” Khaled Abdel Majeed, founder at London-based Mena Capital LLP, advised Reuters.
Majeed mentioned Dubai must work tougher to draw listings amid rising competitors from throughout the Gulf area resembling Abu Dhabi and Saudi Arabia the place Tadawul, the area’s greatest alternate primarily based on market worth, desires to grow to be a regional hub.
Whereas the worth of traded shares in Dubai was as soon as increased than rival Abu Dhabi, this modified in 2019 and ADX now has a greater than 4 occasions increased common day by day traded worth.
ADX has additionally seen positive aspects after its proprietor, ADQ, launched a market maker final 12 months that tapped right into a fund to spice up liquidity on the bourse.
“It is disappointing from a market viewpoint that you’ve corporations de-listing … at a time after we assume the market wants added depth, extra corporations, which has not been taking place since 2014-2015,” Mohammed Ali Yasin, chief technique officer at Al Dhabi Capital in Abu Dhabi, mentioned of the Dubai inventory market.
For the reason that begin of 2020, two distinguished Dubai corporations have de-listed from the Dubai Monetary Market (DFM) and Nasdaq Dubai: Dubai parks operator DXB Entertainments and Dubai ports operator DP World.
And shares in Arabtec, as soon as a high-flying Dubai building firm, have been suspended in September after its shareholders voted to dissolve firm.
Emaar Malls, operator and proprietor of the world’s largest buying centre, in March mentioned it deliberate to supply to purchase out minority shareholders and merge with Emaar Properties.
And Dubai actual property fund Emirates REIT, which is listed on the Nasdaq Dubai alternate, mentioned in July it was contemplating de-listing.
The place Abu Dhabi is boosting liquidity by way of deliberate new listings and consolidation of property of state holding firm ADQ, Dubai seems to have grow to be extra tolerant of delistings, a Gulf M&A banker advised Reuters. Analysts say the transfer to de-list spares corporations having to face scrutiny from traders, together with the operating prices of a list and disclosure and transparency necessities.
“If somebody desires to take (their firm) non-public; that is the time,” the M&A banker mentioned.
Requested what steps, if any, it was taking to make sure that listed corporations remained on the alternate and that it attracted new listings, the DFM declined to remark
Graphic: Worth of shares traded in Dubai versus Abu Dhabi: https://graphics.reuters.com/EMIRATES-DUBAI/DELISTING/azgpoolqwpd/chart.png
The issue for listed Dubai actual property corporations is that they’re buying and selling at a reduction to the typical worth to earnings of the broader market, at round 8 occasions earnings, whereas the market is buying and selling at round 20 occasions that.
“For DAMAC, I am positive that the strategic investor, Hussain Sajwani, understands that the intrinsic worth of the corporate is increased than the share worth, Tariq Qaqish, chief government of Salt Fund Placement in Dubai, mentioned.
The 2 years resulting in the COVID-19 pandemic uncovered the vulnerabilities of Dubai’s homebuilders and property corporations, mentioned Samer Haydar, director of company rankings at Fitch.
And regardless of indicators of restoration, many are “nonetheless dealing with the aftermath of the pandemic by way of detrimental working capital, rising leverage, weak liquidity and general un-absorbed provide out there,” Haydar mentioned.
($1 = 3.6728 UAE dirham)