Business | Investment
Wait for the tide to turn
A few weeks ago, I guess to the consternation of shareholders, I took the side of Emaar saying that they should be a bit patient with the company, the biggest real estate developer in the region, as it evolves into a global firm extending its footprints in Asia and Africa and further.
- By Gaurav Ghose, Financial Features Editor
- Published: 01:04 February 23, 2008
A few weeks ago, I guess to the consternation of shareholders, I took the side of Emaar saying that they should be a bit patient with the company, the biggest real estate developer in the region, as it evolves into a global firm extending its footprints in Asia and Africa and further.
The vagaries of global business climate have to be appreciated by the shareholders but yes, tackled by the company in a forthright manner with the right moves, backed by the right strategic decisions.
Today's column is not about Emaar. It's about another UAE firm, perhaps more global in stature than Emaar. Dubai Ports World is all over the globe in the real sense having a presence in almost all continents and in a field, namely container shipping, that is global in its scope. It is the world's fourth-biggest port operator.
It was big news when it announced its IPO debut at our own international exchange, DIFX, preferring it over other global bourses. It was the largest IPO ever in the Middle East and there were expectations, indeed huge expectations, that the IPO will finally jumpstart the DIFX. On the opening day November 27 of its $4 billion listing, DP World was up 4.6 per cent, rising to a high of $1.44 and closing the day at $1.36, compared to the IPO price of $1.30.
And on Thursday at 2.29pm, with about two hours still to go for the trading session to end, DP World was quoting at 92 cents, down minus 2.13 per cent. And that is about 34 per cent down since the first day of its debut. As was reported when the global stock markets got their jitters in January, DP World had hit a new low, falling as much as 16 cents on a single day to 85 cents. I have no doubt that investors who bought the DP World shares are feeling burnt or bitten, a natural feeling especially among the retail segment. Not making light of their sentiments, the investors should look beyond the short term.
But again, to reiterate a point on the lines similar to Emaar, much of the market movement of a company as global as DP World depend on the sentiments revolving around the impending US recession and its after-affects - that of global trade slowing down. But given the demand for goods in some parts of the world more than others, container shipping movements, as one consultant said to Bloomberg news in January, ports business should be resilient. Such companies are, according to some analysts and traders, are long-term buys. You just have to get used to the short-term volatility and wait for the tide to turn.
And what about the fate of DIFX? Some people after DP World's continuing lacklustre performance on the exchange have written it off. Others, perhaps the one with patience and wisdom, see such a reaction as foolhardy. After all, exchanges take their time to develop and cannot be on par with other global ones in a matter of a few years. It will take time. Again, the issue is one of having patience and bringing down expectations to more realistic levels.
(As full disclosure, just to let you know that I don't own shares in either Emaar or DP World.)
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