UAE stocks up as Dubai investors build overseas

UAE stocks up as Dubai investors build overseas
By Administrator
Sat 18 Nov 2006 04:00 PM

The Dubai Financial Market (DFM) showed signs of recovery from its previous market slump when it closed last week at a respectable 382.8 points. Trading was relatively fast and exceeded the US$272m mark. Telco newcomer du was the most heavily traded stock. The Abu Dhabi Securities Market also finished relatively high at 3,151 points.

Reasons for the upturn were numerous large developments, led by Sunday’s initial public offering of 20% of the DFM, which will remain open until November 23. The Dubai government, the main shareholder in the DFM, is offering 1.6bn shares, worth a total of US$435m. 720m shares are available in a private offering to certain specified investors, with 880m available to the public.

The Emirates Post has also announced plans to go public once it finishes restructuring, as Chairman Sultan Saeed Al Mansouri declared last week. The company said it would buy an Indian cargo and courier firm within the next two months in a bid to enter the international freight forwarding, cargo and warehousing market.

Dubai has furthermore signed a bilateral agreement with the South Korean City of Busan that is set to boost trade, tourism and technology between the two cities. DP World is developing a port in Busan - a large scale multi-billion dollar project that is expected to be operational by 2011.

Dubai World Chairman Sultan Ahmed bin Sulayem has further confirmed plans to invest US$2.9bn in a major infrastructure development project in the UK. The London Gateway project will include a port capable of handling the largest deep-sea container ships, as well as the UK's largest business park. The site of the project will be the former Shell Haven oil refinery in Essex.

Together with the Dubai Islamic Bank (DIB), Dubai World will next month complete the initial collection of contributions towards a US$10bn Islamic fund that will invest in a range of companies across various sectors. Dubai World and the DIB said in April that they would set up seven Shariah compliant funds to invest in mostly unlisted companies in industries including energy, telecommunications and financial services.

This fund will close together with Dubai International Capital’s US$1bn global strategic equities fund that will target the 500 largest companies worldwide in terms of market capitalization.

In Abu Dhabi, the investment agency Mubadala Development and the German construction group Hochtief are together bidding to develop airports in Jordan and Tunisia. “The joint venture is also looking to manage airports in the Middle East and North Africa," Waleed Ahmad Al Muhairy, Mubadala COO, explained.

“Although the UAE markets seem to be on the rebound, they will never mature completely without the proper legal framework in place," said Rashed Al Baloushi, the acting director general of the Abu Dhabi Securities Market. “Regulation of collective investment schemes and a UAE trust law are needed to encourage the creation of more mutual funds in the UAE, attract overseas institutional investors, protect unit holders and support long-term market stability,” he said. Al Baloushi recommended that a code of ethics for fund managers be incorporated into the stocks and commodities authority law.

Saudi Arabia’s bourse lost heavily in the last 14 days; the Saudi benchmark index slipped again by 2.64% last week, after Sunday’s 8% surge that was the bourse's biggest one-day rise in around three months. The Tadawul All Share Index closed down 228.91 points at 8,433.42. Market leader Sabic dropped 4.9% to US$28.7 and Saudi Telecom lost 5.9% to US$23.5 bourses benchmark index.

Abdulrahman Al Tuwaijri, head of the Saudi Arabian Capital Market Authority, had earlier suggested that investors start buying up shares at low prices to stop a major crash in the country's stock market. The bourse fell by almost 25% in a few days, which prompted share prices to fall to an attractive level.

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