The outstanding success of the Amlak Finance initial public offering with $4 billion chasing $122m worth of new shares suggests that the UAE stock market is about to follow Kuwait and Saudi Arabia into the stratosphere.
For Emaar Properties the Amlak flotation is a massive vote of confidence, and an endorsement of its pioneering development of freehold property sales in Dubai. Emaar's own shares should now benefit as frustrated Amlak IPO buyers put their money back into the UAE bourse.
At the time of writing, just before the Eid holiday, the UAE bourse is trading on a price-to-earnings multiple of 18 and a dividend yield of 4.2%. Recent bumper profit results have sent the yield 1% higher and yet the market has yet to react.
So far in 2004 the UAE Emnex index is up just 3.27%, hardly a fair reflection of this increase in yield of more than 25%.
However, the Emnex has broken through the 3,000 point barrier, although to pull back to previous yield levels the market should be challenging 4,000 points.
It will be interesting to see what happens after next week's Eid holiday - the UAE stock market is closed until Wednesday and even then most of the major players may still be away. But expect to see things starting to move higher after that.
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Amlak Finance IPO 33-times oversubscribed
- United Arab Emirates: Thursday, January 29 - 2004 at 09:33
The Amlak Finance initial public offering was 33-times oversubscribed and portends a bright future for the UAE bourse which has yet to price in the bumper profits of recent results, or the ongoing economic boom in the country.
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Peter J. CooperThursday, January 29 - 2004 at 09:33 UAE local time (GMT+4)
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