DFM rebounds after sell-out frenzy ahead of large IPO

Stock markets in the United Arab Emirates rebounded on Thursday after a pull-back related to the upcoming initial public offer of Emaar Properties’ malls unit, while bourses in Egypt and Saudi Arabia slid on profit-taking.

The Dubai index closed 1.0 per cent higher after falling as much as 2.1 per cent at one stage. The benchmark dropped 3.4 per cent in the previous session as local retail investors sold off stocks in order to raise cash for the IPO.

In one of the largest equity sales in the Middle East since 2008, Emaar, Dubai's largest listed developer, plans to float its unit Emaar Malls Group this month and subscriptions for the shares will open on Sept. 14.

Emaar, which plans to sell a 15 per cent stake in its subsidiary, has indicated it wants to raise at least Dh5.3 billion ($1.4 billion) from the offer. It has also said it aims to sell about 30 per cent of the offer to retail investors.

"Now I think that selling is probably finished, and hence the market seems to have rebounded," said Shakeel Sarwar, head of asset management at Securities & Investment Co (Sico) in Bahrain.

Abu Dhabi's bourse, whose investor base overlaps with that of Dubai, rose 1.3 per cent after sliding 1.0 per cent in the previous session. Shares in developer Aldar Properties rose 2.8 per cent after the company said its hotel revenues climbed 13 per cent in the first half of this year thanks to higher occupancy rates.

QATAR, SAUDI

Qatar's bourse edged up 0.4 per cent to an all-time closing high of 14,089 points on the back of Qatar National Bank  and Industries Qatar, up 1.9 and 1.5 per cent respectively.

The two heavyweights will attract most foreign fund inflows if index compiler MSCI decides to further increase Qatar's weighting in its emerging market index during a regular review in November.

Saudi Arabia's main index edged down 0.6 per cent. The petrochemical sector fell 0.9 per cent while banks  slid 0.7 per cent.

"Saudi Arabia has performed very well in the last two months and it was due for some sort of profit-taking," said Sarwar.

Saudi banks have been among the leaders in an uptrend which started after the kingdom's regulator said in late July that it would open the market to direct foreign investment in early 2015. The banking sector index had jumped 21 per cent, also boosted by hopes for higher margins thanks to US interest rate hikes expected next year.

"With the outlook on key earnings drivers remaining broadly unchanged, we find it difficult to see value at current levels," EFG Hermes said of Saudi banks in a report on Wednesday.

The brokerage downgraded Samba Financial Group and Saudi Hollandi Bank to "neutral" from "buy", and Riyad Bank to "sell" from "neutral".

Egypt's index also continued to retreat, falling 1.2 per cent and erasing gains made earlier this month. With year-to-date gains of 40 per cent, the Cairo bourse is still one of the best performers in the region, second only to Dubai which has risen 47 per cent.

THURSDAY'S HIGHLIGHTS

DUBAI: The index rose 1.0 per cent to 4,961 points.

ABU DHABI: The index added 1.3 per cent to 5,180 points.

QATAR: The index edged up 0.4 per cent to 14,089 points.

EGYPT: The index fell 1.2 per cent to 9,476 points.

SAUDI ARABIA: The index edged down 0.6 per cent to 11,063 points.

KUWAIT: The index added 0.1 per cent to 7,488 points.

OMAN: The index slipped 0.03 per cent to 7,545 points.

BAHRAIN: The index climbed 0.5 per cent to 1,468 points.

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