Dubai’s real estate gains draw all of the attention to itself
Yet, outside of real estate, there is so much of blue-chip corporate activity happening
Around the time railroads became a mature technology in New York, the newspapers perceived in the stock market a substitute for the battlefield.
And started covering stories of ‘speculators’ like Daniel Drew who managed to get a board seat on the New York and Harlem Railroad, and reaped considerable profits, before he came against the might of Vanderbilt, who saw the railroad as part of a larger transport investment rather than an instrument of short-term speculative activity.
As Vanderbilt dangled with Drew, Fisk and Gould, the press gleefully labelled the conflict the ‘Erie War’.
The rise and fall of share prices graced the front page headlines of all the dailies, and in the process started the investment revolution. Journalists loved the intricacies and perplexities of financial minutiae, as increasingly tiny bits of paper (shares) denoted underlying ownership to ever larger and more complex business structures. The media popularized the glamor of speculation versus the boring stuff of long-term investments, but in the process galvanized the interests of the small shareholder to participate in the wealth creation that was taking place.
Nearly 200 years later, the debate between speculation and investment rages on, but the there is no denying the fact that the media dramatically contributed to the growth and development of the capital markets, well before there was any regulatory controls in place.
In Dubai, the media has been largely fixated on covering the impressive accolades being registered by the real estate markets. Not a week goes by where there is no headline about yet another development or a mansion built by a tycoon, existing or prospective, with amenities that serve the primary purpose of outdoing what’s already been done.
Overlooking all of the rest
Amidst this process - corporate moves, either through takeovers, share acquisitions, expansion plans, buy backs and restructuring of listed companies - have for the most part not been dissected. This is similar to the time after the Great Depression of the 1930s, where commentary on the capital markets in Wall Street was largely avoided, thus missing the stealth rally that was underway in the latter part of the decade.
This lack of enthusiasm was partly because of the lack of personalities associated with the companies; stats are boring unless they are attached to tycoons that brashly proclaim their vision in order to make it personable. In Abu Dhabi alone, the last two years has witnessed the listing of more than 40 securities instruments, including a derivatives market that has become increasingly liquid.
From global acquisitions being undertaken by the likes of e&, Emirates Steel, and IHC, to the recent acquisition of healthcare firm Sukoon by Amanat, to debt offerings from Damac, plans are afoot to monetize corporate activity in the UAE. Yet, for the most part, they are currently being dwarfed by the headline grabbing real estate developments. Apart from the spate of IPO activity, there has been virtually no coverage on secondary market activity and the greater than global market returns that have been delivered on a year-to-date basis.
Being in the market’s shadows do help
For the long-term investor, this is good news, for the time to be interested in stocks is when no one is looking at it. Yet there is no denying the fact that widespread stock ownership is highly correlated to media coverage. In the early 1850s, stock punters such as Daniel Drew wondered whether the fault lay in the stars, and concluded that the world would have to change for this kind of talent to be covered.
In the UAE, it is inevitable the ‘new world” explanation is in the offing. The market for scholar gypsies being limited, the journalist is likely to step up to increasingly cover the extraordinary corporate capital market activity that is underway in the secondary markets.