Grey market for Amlak points to UAE stock boom

In the unofficial 'grey', pre-listing market for Amlak shares, the Dhs1 shares are trading at Dhs2.50, or two-and-a-half times their issue price.

This is what you would expect for an IPO that was 33 times oversubscribed, and which allocated investors just 3% of their share applications.

Yet investors should also be looking at other UAE shares and mutual funds. The recent string of stellar results from the banking sector highlights the fact that Amlak is not the only share worth buying in the market.

The banking and financial sector accounts for over half the value of the UAE stock market and can expect to be a big winner in the enormous economic boom now about to hit the UAE.

With $30-50 billion now committed to Dubai development projects and sums of similar magnitude pouring into oil and gas development in Abu Dhabi, the UAE is entering a period of rapid economic growth, quite out of proportion with anything seen since the 1970s.

Banks will clearly benefit, acquiring new customers, handling new wealth, and loaning money for some new projects.

Moreover, as most of this new investment is equity and not borrowed capital, the banks have a low risk exposure in this boom while benefiting fully from the increase in funds under their management.

So for investors bank stocks offer modest risk leveraged against the booming UAE economy. The strength of the UAE Central Bank and the upcoming Dubai International Financial Centre as regulators can only reinforce this great outlook for the banks.