The UAE’s equity markets were little changed on Sunday just a few days ahead of the highly-anticipated initial public offering (IPO) of Adnoc Distribution, whose shares will start trading in Abu Dhabi on December 13.
The Dubai Financial Market (DFM) index was nearly flat (up 0.06 per cent) to end the day at 3,395.39, while the Abu Dhabi Securities Exchange (ADX) index gained 0.42 per cent to reach 4,294.87.
This followed the launch of subscription for Adnoc Distribution’s IPO, which raised Dh3.49 billion in retail subscription alone. Besides the IPO of an Emaar unit last month, this is the only major listing in the UAE’s markets, and is expected to attract liquidity into the region’s markets.
“If you look at the business model, I certainly think it’s very solid, with many positive aspects to it. I think there’s a lot of operational efficiencies that are going to be coming through for the company, and there’s been a lot of interest from GCC and local investors. It’s [a company] that I think will be a core part of most investors’ portfolios,” said Saleem Khokhar, head of equities at global asset management at First Abu Dhabi Bank.
He pointed that, unlike the parent company Adnoc Group, Adnoc Distribution’s financials will not be impacted by fluctuations in oil prices much, as the unit will be able to pass that cost to end-users. Demand for Adnoc Distribution’s products is also relatively inelastic as vehicle owners regularly need to get fuel.
Smaller cap stocks
Elsewhere in the market, trade continued to concentrate on smaller cap stocks. Drake and Scull International accounted for nearly half of the Dh434.4 million traded on DFM as its shares fell 1.86 per cent.
Meanwhile, GFH Financial Group slid 1.24 per cent, as Union Properties gained 1.2 per cent, and Arabtec rose 1.26 per cent.
As for outlook for the UAE’s markets going forward, FAB’s Khokhar said he expected the next year to see better performance, provided no new major risks pop up.
“In a global context, [markets] in the GCC have underperformed. In terms of relative and absolute valuations, I think the UAE and GCC certainly offer very good value. With the oil price now stabilising and getting stronger, it adds a positive backdrop to that. Provided the global environment doesn’t get too volatile, we’re in for a fairly good chance of putting in some decent performance next year,” he said.