By: Mahmoud Gamal
Dubai – Mubasher: Investors seem to have specific requirements when it comes to investing in UAE bourses. While most look to companies’ financial disclosures as a main market driver, analysts pinpoint other aspects that attract investors to the Abu Dhabi Securities Exchange (ADX) over its counterpart, the Dubai Financial Market (DFM).
ADX positives
There are a variety of reasons that make the ADX more attractive to investors compared to the DFM, mostly notably is the ADX’s continued overall positive performance since late June 2018, according to Al Safwa Mubasher CEO Ehab Rashad.
The ADX’s rise has been primarily backed by the banking sector, which logged an overall growth of around 8% since the start of the year, Rashad told Mubasher, noting that the sector’s leading banks’ financial results and generous divided distributions make it a destination for investors.
He gave First Abu Dhabi Bank (FAB) as an example, indicating that its board had proposed good distributions compared to other listed banks.
FAB’s board shareholders will discuss the dividend proposal for the fiscal year 2018 on Wednesday, 30 January.
Among the ADX’s advantages is the strong merger drive within the bourse’s banking sector, which helps reduce the sector’s costs and bolster profits, while also offering better customer services and dividend distributions to shareholders, Rashad went on.
It is worth noting that, Union National Bank’s (UNB) board will convene on Tuesday, 29 January to discuss updates on the bank’s potential three-way merger with Abu Dhabi Commercial Bank (ADCB) and privately-owned Al Hilal Bank.
Meanwhile, MenaCorp’s senior financial analyst Issam Kassabieh cited the ADX’s “balanced performance” as being the top reason garnering investor interest, particularly institutions’.
He further noted that there have been many forecasts of strong upcoming dividend distributions for the ADX’s various sectors, especially telecoms.
DFM
As for the DFM, Kassabieh told Mubasher that the bourse had entered into a declining trend on the back of the slowing real estate sector and a drop in property prices in the emirate. There have also been projections that DFM-listed real estate companies would see lower profitability in the coming period.
Moreover, Kassabieh noted that rumours of companies exiting or having their weight lowered in the MSCI Emerging Markets Index has prompted several investors to avoid taking major DFM-related decisions in addition to a lot of liquidity exiting the bourse.
Incentives
As for incentives, Kassabieh said that companies’ disclosures of investments and updates on diversifying their revenue sources could help companies in the coming period.
He cited DAMAC Properties’ recent announcement that it was planning to conclude deals worth between GBP 500 million ($658 million) and GBP 1 billion ($1.32 billion) in Central London as an example.
“If it was a hard Brexit there will be more opportunities and we would be looking to take advantage of that,” DAMAC chairman Hussain Sajwani said last week on the sidelines of the World Economic Forum (WEF) in Davos, Switzerland.
Translated by: Nada Adel Sobhi
