Malls and mobiles

Emaar’s IPO and Telecom Egypt’s new license push markets higher

Dubai mall fountain sculpture
Taking the IPO plunge (Lijoy Joseph | Flickr | CC BY-SA 2.0)
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Arab markets made a well behaved transition into September. Benchmark indices at all regionally relevant exchanges moved as one might expect top local influencers want them to in the 36th week of the year. Saudi Arabia’s TASI went sideways just after some analysts started to warn of potentials for overheating. The Egyptian and Qatari benchmarks fielded new peaks, with their gains of 40 percent for the year to date shooting flares drawing attention.

The two exchanges of the United Arab Emirates advanced nicely, with the Dubai market driven higher by almost 4 percent, courtesy of Emaar’s upcoming initial public offering of its malls unit and the linkage of ownership in Emaar Properties stock with priority allocation of shares in the IPO. This was confirmed by Emaar in a disclosure to the DFM dated September 2. According to Emaar, the priority allocation applies to 10 percent in the retail tranche of the offering, which in turn will amount to approximately 30 percent of the total offering of 2 billion shares, representing some 15 percent of the 13 billion shares in Emaar Malls Group. Expected tight allocation of IPO shares due to high demand is something that the regionally hot Emaar Malls IPO has in common with the similarly timed but globally watched IPO of Chinese online giant Alibaba on the New York Stock Exchange.

The share price of Emaar Properties, which leapt over 12 percent in the first two trading days of week 36 on the demand stirred by the company’s confirmation of its malls unit’s floatation, ended the week up 11.2 percent. While the ADX General Index advanced at a slower pace than its DFM counterpart, both UAE benchmarks marked September by sustaining levels above 5,000 points. Both UAE markets are back near multi-year highs. After losing the position of strongest year-to-date gainer during its summer upheaval, the DFM is once again the best performing Arab stock market for 2014 to date, with an index gain of over 50 percent.

The Qatari bourse rebounded from the profit taking seen at the end of week 35, and the index’s 4 percent gain in week 36 made it the period’s top performer in the MENA and gave the QE a new all time high. Ooredoo, the entity once known as Qatar Telecommunications, gained 15.5 percent on the week on a recovery from selling pressure at the end of week 35, yet the stock is still more than 20 percent cheaper when compared with its year-high at the end of May.

While not achieving a weekly gain, the TASI kept its nose above 11,000 points throughout week 36. This puts the Tadawul at a price level last seen at the beginning of 2008. Market cap leader Sabic edged up 0.3 percent.

In contrast to the Mashreq and Gulf region’s other smallish markets — Jordan, Lebanon and Bahrain — which moved lower during week 36, the MSM 30 index of the Omani bourse continued its ascent and ended the week at the highest level since fall 2008. According to statistics cited by the sultanate’s state news agency, share purchases by foreign investors in the month of August contributed to the market’s rise.

In Egypt, the EGX 30 index closed week 36 at a new post-global financial crisis peak. Neither a far reaching blackout in the country’s main industrial cities on the week’s last trading day nor news of the country scoring a dismal 119th in the Global Competitiveness Index deterred the rise of the Egyptian bourse. Factors that lifted the market included a decision of the central bank to keep interest rates steady, which was followed by higher demand for property stocks, and government approval for issuing landline operator Telecom Egypt with a license that will allow the firm to add mobile services to its portfolio. This led to a one day 4.7 percent price gain and a tremendous spike in transactions of the company’s stock on September 4, the day after the license news was announced.

On the Suez Canal front, sales of investment certificates went through the roof after presidential signature of the requisite law at the beginning of September. According to statements attributed to the governor of the central bank, Hisham Ramez, first-day sales of the certificates reaped EGP 6 billion ($840 million) and total sales escalated to EGP 14.5 billion ($2 billion) by September 7. This would put the country in an enviable position of having reached a quarter of its funding target after only two days in the initial round of issuing certificates.

Thomas Schellen

Thomas Schellen is Executive's editor-at-large. He has been reporting on Middle Eastern business and economy for over 20 years.