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21 April 2024

‘Hot money’ tests DFM limits



International investors have been net sellers of shares in developer Emaar, pulling out more than Dh1.4 billion from the stock in 2008.

The property firm, a bellwether of the Dubai Financial Market, has seen its share price decline 20 per cent and Dh17bn wiped off its market capitalisation during the first two months of this year.

While this can be seen as a sign of capital flight and affirmation that foreign investors are moving some “hot money”, market analysts say GCC markets in general, and the Dubai Financial Market (DFM) in particular, remain attractive to global investors.

Brad Durham, managing director at EPFR Global, which tracks the asset allocation data from funds that control $10 trillion (Dh36.7trn) in assets, said the Middle East and North Africa recorded net fund inflows for 23 out of the past 24 weeks.

This influx of capital from international investors has flowed into shares of other local companies, such as home lender Tamweel and carrier Air Arabia, where foreign investors have acquired stock worth Dh60 million and Dh400m, respectively.

Sherif Abdul Khalek, dealing room manager at Al Futtaim HC Securities, said the brokerage has noticed an increase in orders from foreign investors for Air Arabia since the beginning of the year, and the appetite is still strong for builder Arabtec, investment bank Shuaa and logistics firm Aramex.

“The ownership breakdown hasn’t changed markedly in [the latter stocks] because we consistently hit the foreign ownership limits,” said Abdul Khalek.

“I regularly put in orders for clients in Arabtec and Aramex and they could not be executed due to the fact the maximum foreign ownership limit was reached, but the appetite is out there.”