What to look out for when investing in an IPO?
Abu Dhabi stock market’s golden run is set to continue with more blue-chips headed for listings. Image Credit: Gulf News Archive

The ADX recently marked a milestone by crossing the Dh1 trillion market cap, making it one of the best-performing stock markets in the region.

For the quarter ended September 30, ADX closed higher by 13 per cent, while the DFM made only a marginal 0.78 per cent gain.

The top gainers were Al Mal Capital REIT (330 per cent), Al Qudra Holdings (277.66 per cent), Zee Stores (266.6 per cent), Emirates Stallions (112.96 per cent), Emirates Refreshments (62.35 per cent), Alpha Dhabi Holdings (55.21 per cent), Ras Al Khaimah Poultry (98.93 per cent) and Easy Lease Motors (82.25 per cent).

Last year, DFM achieved a crucial milestone by introducing REIT trading through the listing of Al Mal Capital, a subsidiary of Dubai Investments. The UAE residential market staged a strong recovery as a record 54 properties worth $10 million-plus were sold in Dubai during the third quarter of this year.

The euphoria around the fact that the UAE has beaten the pandemic and the excitement around the Expo adds to the confidence taking hold in the residential market. These factors certainly contributed to the strong performance of the Al Mal Capital REIT.

Pacing along

Emirates Stallion Group is a diversified investment, engineering, and construction services business owned by Abu Dhabi’s International Holding Co.. Recently, ESG announced that it had been awarded a three-year landscaping contract, one of the largest public municipality projects of its type in Abu Dhabi. Emirates Refreshments Co, on the other hand, witnessed stellar returns in the quarter due to its recent plan to increase the authorised share capital to Dh600 million.

Losing ground

The worst performing stocks were Emirates Insurance (down 16.88 per cent), Emirates Islamic Bank (18.75 per cent), Abu Dhabi National Takaful (19.25 per cent), Takaful Emarat Insurance (19.54 per cent), and Al Firdous Holdings (33.22 per cent).

The disappointing performance of insurance stocks is not a surprise as people are now less fearful of the pandemic, with a significant percentage of the population fully vaccinated.

Insurers get a cold shoulder

During the pandemic, insurance companies had witnessed sizeable gains as people rushed to insure their loved ones in the face of uncertainty. Indeed, that’s not the case now.

Recently, Merck announced that their experimental oral antiviral drug, molnupiravir, might halve the risk of death or hospitalization from COVID-19. The drug is administered orally, and it could turn out to be a gamechanger. All of this will give a significant boost to companies that benefit from the normalization of the economy.

In the UAE context, Air Arabia, National Corp for Tourism and Hotels, Abu Dhabi National Hotels and Dubai Refreshments Co are some of the companies whose shares can outperform the general market.