Legendary Dubai investor Shehab Gargash explains why - despite pushing his own firm’s IPO back to 2015 - sentiment in the UAE is picking up
The sale of his company’s shares to the public may not be taking place because of unfavourable market conditions. Yet Shehab Gargash is bullish and optimistic about the future.
“Two important things happened recently, the regional turmoil politically with the Arab Spring and the adjustment in valuations in the more developed regional markets, the Gulf,” Gargash says. “Taking both of them into consideration, I think the future looks very promising for the Gulf. The macroeconomics are very sound, the valuations are attainable, the exaggeration premium has been flushed out.”
As managing director of Daman Investments, one of the UAE’s most prominent financial services firms, Gargash’s opinion is one that is widely valued.
Indeed as the global economy appears to be faltering, China, the world’s second-largest economy, is witnessing a decline in growth, and Europe is grappling with its debt crisis and the fate of the euro. There appears to be little room for optimism. But as investors contemplate what will galvanise a global recovery, Dubai’s economy is slowly making a comeback.
The combined market capitalisation losses in the Abu Dhabi and Dubai stock exchanges between September 2008 and end-March 2012 exceeded $100bn, according to a June report by the International Monetary Fund.
“Equity markets have become significantly more correlated with global markets since September 2008, and market volatility increased after the crisis, but seemed to have settled down since the beginning of 2011,” the Washington-based organisation said.
Though initial public offerings are scarce in the emirate compared to the boom peaks witnessed in 2008, investor confidence in real estate, which accounts for about thirteen percent of gross domestic product, is rebounding.
Dubai’s economy continued to grow in the first half of 2012 even as oil prices declined and uncertainties lingered about the state of global economy and debt crisis in Europe, according to Jones Lang LaSalle Inc.
Even though few major investment transactions remain due to the lack of quality stock being offered to the market at prices investors feel are attractive, “investor sentiment towards Dubai real estate continues to improve, with increased sales of individual residential properties,” according to the Chicago-based broker.
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