Damac weighed on sentiments, after the developer issued a statement dismissing speculation about a privatisation move. Image Credit: Gulf News Archive

Dubai: Bucking the positive sentiments on the global markets, UAE indices posted a mixed performance, with DFM in the red while ADX was trading positive.

Damac Properties fell by 1.63 per cent after a statement of the company to DFM clarified it had no knowledge about a media report related to the president, Hussain Sajwani, planning to take the company private.

Itsshares have declined nearly 84 per cent from its 2017 highs. The demand and supply imbalance in the real estate market along with global uncertainty has pummeled the share… even though the company doesn’t seem to have any cash constraints.

The Dubai developer has cash of Dh4.93 billion when compared to debt of Dh 3.56 billion on its balance-sheet, according to the latest financials. To be frank, the real estate market is still facing a huge surplus with lot of supply expected in the next two to three years The fundamental backdrop for Damac shares looks challenging.

Union Properties gained 1.01 per cent as the company seems to be in the last stage of debt restructuring, which should give it some relief.

Stellar run for some

On ADX, the index was propelled higher by FAB, which has concluded the final terms of a CNY200 million note as a part of its $15 billion EMTN program.

Taqa (Abu Dhabi National Energy Company) rallied 14.95 per cent with Dh 8.95 million worth of shares changing hands today. It was buoyed by the news of the company’s plans to offer more shares to the public, and Moody’s upgrade of its credit rating from A3 to Aa3.

The merger has created the third largest listed entity in the UAE, but due to the “free float” norm of ADX the weightage of the company is below 1 per cent.

In the free float methodology, the number of shares readily available in the market is used for computation of weightage. Currently ADPower owns 98.60 per cent of the entire issued share capital of Taqa, and these shares will not be used for weightage calculation in the index.

If more shares are offered to the public, that will change the very nature of ADX. FAB and EITC with 39 per cent and 25.76 per cent weightage are the largest components on the index, making it highly concentrated.

Taqa with its ADPower assets is now a blue-chip company with a virtual monopoly in Abu Dhabi’s utility space, and the shares should attract a new class of investors. The company has 23 GW of power generation capacity globally and 916 MIGD of water desalination capacity.

- Vijay Valecha is Chief Investment Officer at Century Financial.