Weak oil may depress GCC stocks, dampen Dubai’s latest listing

Gulf stock markets may remain depressed on Wednesday after oil’s rebound late on Tuesday turned out to be short-lived and the commodity resumed its retreat.

Brent crude dropped about $1 to around $66 a barrel on Wednesday morning on persistent oversupply worries.

The resulting bearish mood in Gulf markets may limit demand for shares in Dubai Parks and Resorts (DPR), which are being listed on Wednesday after a Dh2.5 billion ($689 million) initial public offer.

The offer itself was many times oversubscribed and drew the attention of sovereign wealth funds Kuwait Investment Authority and Qatar Investment Authority. But Dubai's retail investors, who dominate trading in the emirate, were much less enthusiastic about the stock and the portion of the offer allocated to them was only 1.63 times oversubscribed, a much lower level compared to IPOs earlier this year such as Emaar Malls Group.

DPR may still rise on its first day of trade; the UAE's Arqaam Capital on Tuesday rated DPR a “buy” with a price target of Dh1.49, implying 49 per cent upside potential. The company is building a $2.9 billion amusement park complex in Dubai and aims to complete it in late 2016.

But the fact that DPR will not generate any income before that may keep some investors away, said Sanyalak Manibhandu, manager of research at NBAD Securities in Abu Dhabi.

“We are in a market that is very jittery,” he said. “Anything that does not have a track record of operation is going to be avoided.”

Shares in Amanat Holdings, a healthcare and education start-up which listed at the end of last month, have since traded below their IPO price of Dh1 and closed at Dh0.907 on Tuesday.

Dubai’s index has tumbled 9.2 per cent this month in a sell-off prompted by oil's plunge. However, the benchmark is still up 15.4 per cent year-to-date.

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