(DENNIS B MALLARI)
Fund flows from international banks and financial institutions into UAE shares hit record levels in 2007, according to official data.
Non-regional investors, mainly from the West, now own significant stakes of between eight per cent and 35 per cent in about 10 UAE-listed companies. Property firms and financials, such as construction company Arabtec, developers Aldar, Emaar and investment bank Shuaa Capital, were most popular with foreign investors.
Logistics group Aramex and carrier Air Arabia have also attracted major investment from Western institutions. Analysts say this rise in international investment, which has increasingly flowed into UAE markets since the start of 2007, is one of the leading factors behind the return of confidence in local financial markets – which had lost some 60 per cent of their value the previous year.
Billions of dollars from regional and international investors flowed into UAE shares as more value came into the market, they said.
In 2007 the Dubai Financial Market index jumped by more than 45 per cent to end the year a shade below 6000 point. The Abu Dhabi Stock Market index rose by more than 52 per cent to close the year above 4551 points.
The wider flow of foreign capital into these companies propelled their shares to new highs, in many cases exceeding the overall performance of the market. Aldar Properties’ shares, for example, jumped from Dh3.6, its 52 week low, to more than Dh12 in the final week of 2007 – representing a more than 300 per cent jump for shareholders. Arabtec shares rose by almost 100 per cent during the same period to reach levels of around Dh9.5 a share.
Some listed firms are close to the non-Emirati ownership limits set by their boards and approved by the regulator. UAE company law restricts foreign ownership of a company to a maximum level of 49 per cent.
At the DFM, Arabtec’s foreign ownership by the end of 2007 stood at 48.93 per cent, Aramex at 47.78 per cent and Shuaa Capital at 47.51 per cent.
Analysts said the limits on foreign ownership could dampen the international appetite for UAE shares, especially among US pension funds.
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