Please register to access this content.
To continue viewing the content you love, please sign in or create a new account
This content is for our paying subscribers only

Business Analysis


In UAE stock markets, 2023 was definitely the year of retail investors

Each IPO seemed to draw in a surge of new individual investors – and they are staying put

UAE IPOs have been giving every reason for country's resident investor base to check them out - and stay invested. This boom phase is only getting bigger.
Image Credit: Shutterstock

What is the communication system for investing? The stock market.

The sources are not only the prices but also the level of demand. The spate of IPOs in the UAE have shown the extraordinary communication from retail investors, who have stood up and demanded to participate in the extraordinary change and opportunities capital markets are signaling.

The PureHealth IPO had a retail allocation oversubscribed by a staggering 483 times, with the monies that came in totaling nearly 42 per cent that institutional investors subscribed for. The Phoenix IPO retail tranche was oversubscribed 180 times, and the likes of Dubai Taxi, ADNOC L&S and ADNOC Gas increased their retail allocation after receiving demand that exceeded forecasts by a factor.

There is nothing that links these companies from an industry standpoint. While it is clear that there remains a preference for dividends, there have been others that have not communicated a dividend policy but saw overwhelming demand nonetheless.

All of this has transpired in the backdrop of US investor data that show retail investors sat out the recent rally in American stocks (especially since 7 stocks accounted for more than 80 per cent of the gains).


When we look at the secondary markets, most UAE IPOs have continued to perform well with significant secondary market activity, as investors continued to accumulate (whether their motive has been momentum based or reallocation of assets towards domestic markets).

Finally, we have seen the stock investment conversations moving into the living room, taking place with the same level of enthusiasm as was once done for stocks such as Tesla or Apple. And far greater than that for meme stocks such as Gamestop, Chewy and Lyft. Why has this happened?

The answer appears to be obvious.

PureHealth’s timing was spot on

Retail investors have gone to a first principles approach, focusing on the economics of the business rather than the stock price and the ‘noise’ associated with it. After the fashionable emerging market hypothesis and the tech obsessed loss making company mania, there is this sense that investing in companies has to do with the underlying profits they make. And the return that investors are expected to make as a result of that.

In the case of Dubai Taxi, the comparisons to Lyft makes it obvious as to why Dubai Taxi is clearly the better choice. The same was true for DEWA vis-a-vis Devon Energy. Likewise, the business model put together by PureHealth makes it the obvious candidate for capturing growth in a sector where the world has become obsessed with post-Covid.


The critic in the room surely argues for the leverage that retail investors have taken on for their subscription. But that leverage does not explain for the secondary market performance for most of the IPOs as well as their resultant gains, indicating that the appetite remains strong as the number of overall investors increase.

The critical issue is that retail investors are being less swayed by the psychological forces affecting the market. And more so at what the company is producing.


A reset of earlier investment choices

Is there some speculation? Undoubtedly so, but the overall thrust seems to be about investors putting together a portfolio whereby they can channel their savings (historically reserved for their home country markets) even before the pension fund scheme kicks in.

Stock picking is not for everyone to be sure, but with the privatization program and the quality of companies that have come in with their valuations, there is little that can be done to hold retail investors back.

There will be other IPOs, and some may well allow for even greater capital gains, but that is health for an ecosystem of investors where choice is greater in the same way that it has been for real estate markets.


There is no doubt that investors need to be careful and analyze every business for what it offers. However, going back to the communication system and the subscription levels that have seen for the various IPOs (especially PureHealth and Dubai Taxi), it appears as if the retail investors are well caught up already.

Sameer Lakhani
The writer is Managing Director at Global Capital Partners.