DUBAI // This morning's trading debut by the UAE jewellery retailer, Damas International, is not expected to gain the long-term attention of investors, with analysts forecasting a short positive performance followed by a dip in price.
A lack of liquidity and low trading volumes has plagued the Dubai International Financial Exchange (DIFX) since it was formed in Sept 2005. However, many analysts have considered the Damas listing - the first by a retailer - as a way to test the appetite of international investors for local firms.
The test was to have been Future Pipe Industries, until the Dubai pipe maker shelved plans to raise US$554.4 million (Dh2 billion) through an initial public offering (IPO) and subsequent listing on the bourse in May.
"Stocks have not performed well on the DIFX," said Alaa el Din Moustafa, the chief dealer at EFG Hermes. "Most are below the initial offering price."
Mr Moustafa added that he did not have major expectations from the Damas listing. "It may trade above the IPO price for a few sessions, but could fall well below, like others have," he said. DP World, the fourth-largest global port operator that is owned by the Dubai Government, raised $4.96bn when the company listed on the DIFX last November.
Although it has been the most high-profile listing on the bourse so far, DP World stocks went on to trade at 39.7 per cent below the IPO price.
The Dubai construction and speciality contracting firm, Depa, provided another example of a slide in share price after listing, with the company trading 10.96 per cent below the subscription price.
It appears unlikely that the Damas listing will spur trade on the DIFX, which was created as an alternative platform to provide international investors with an opportunity to enter emerging markets. Besides the liquidity on the exchange, the number of listings and quality of the firms being traded on the bourse were still a problem, said Mr Moustafa.
"As far as Damas is concerned, there is no research available to predict its potential," he said. "However, fundamentally the firm is strong and its shares are not a bad investment."
Mohammed Ali Yasin, the managing director of Shuaa Securities, said that more listings were a positive sign, but added that "everyone realises that the exchange will not take off without the public being involved in trading".
Damas follows the business software firm, NetSol Technologies, the first US-based firm to cross-list its shares on DIFX earlier last month. Damas, which has more than 100 years of operational history in the region, has raised $270m to fund its horizontal and vertical expansion.
The UAE-based electrical and mechanical contractor, Drake & Scull International (DSI), is the latest local firm pushing its IPO today and seeking a subsequent listing on the Dubai Financial Market (DFM).
DSI's move comes at a time when the Dubai bourse is also struggling in terms of liquidity and the falling value of trade. With investors waiting for the traditionally low-trade summer season to end and geopolitical tensions to settle down, analysts do not expect the DSI offering to give a stellar performance.
"The market conditions are bad right now, which is evident from trading in both Abu Dhabi and Dubai bourses," Mr Moustafa said. He added that most investors were away on summer holidays, which could also negatively impact the DSI offering.
"I don't think this will be very heavily oversubscribed," he said. "This will be an IPO which will lack lustre."
DSI is planning to raise Dh1.198bn offering 1.19 billion shares, which represents 55 per cent of the company.
Ajman Bank was the last firm to list on DFM. The sharia-complaint lender's public offering was 88 times oversubscribed.
skhan@thenational.ae
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The biog
Favourite hobby: taking his rescue dog, Sally, for long walks.
Favourite book: anything by Stephen King, although he said the films rarely match the quality of the books
Favourite film: The Shawshank Redemption stands out as his favourite movie, a classic King novella
Favourite music: “I have a wide and varied music taste, so it would be unfair to pick a single song from blues to rock as a favourite"
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The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
The specs
Engine: Long-range single or dual motor with 200kW or 400kW battery
Transmission: Single-speed automatic
Max touring range: 620km / 590km
Price: From Dh250,000 (estimated)
hall of shame
SUNDERLAND 2002-03
No one has ended a Premier League season quite like Sunderland. They lost each of their final 15 games, taking no points after January. They ended up with 19 in total, sacking managers Peter Reid and Howard Wilkinson and losing 3-1 to Charlton when they scored three own goals in eight minutes.
SUNDERLAND 2005-06
Until Derby came along, Sunderland’s total of 15 points was the Premier League’s record low. They made it until May and their final home game before winning at the Stadium of Light while they lost a joint record 29 of their 38 league games.
HUDDERSFIELD 2018-19
Joined Derby as the only team to be relegated in March. No striker scored until January, while only two players got more assists than goalkeeper Jonas Lossl. The mid-season appointment Jan Siewert was to end his time as Huddersfield manager with a 5.3 per cent win rate.
ASTON VILLA 2015-16
Perhaps the most inexplicably bad season, considering they signed Idrissa Gueye and Adama Traore and still only got 17 points. Villa won their first league game, but none of the next 19. They ended an abominable campaign by taking one point from the last 39 available.
FULHAM 2018-19
Terrible in different ways. Fulham’s total of 26 points is not among the lowest ever but they contrived to get relegated after spending over £100 million (Dh457m) in the transfer market. Much of it went on defenders but they only kept two clean sheets in their first 33 games.
LA LIGA: Sporting Gijon, 13 points in 1997-98.
BUNDESLIGA: Tasmania Berlin, 10 points in 1965-66
