UAE equities have had a good start to the year with DFM gaining 6.50 per cent and ADX rallying by 10.86 per cent. Gains in large-cap stocks propelled sharp gains for ADX.
The three largest components in terms of weightage are First Abu Dhabi Bank (39.86 per cent), Etisalat (23.39 per cent) and Aldar Properties (7.30 per cent). All have posted stellar gains with FAB up by 14.57 per cent, Etisalat soaring 23.39 per cent and Aldar 7.30 per cent. Among DFM large caps, Emirates NBD had risen 12.62 per cent year-to-date, and Dubai Islamic Bank 7.38 per cent.
But the star is...
Emirates Refreshments Company, which has seen a breathtaking 247 per cent climb. In late October, a Canadian engineering company had acquired around 9 per cent stake in it. More importantly, the F&B entity raised its authorised capital to Dh600 million, while the issued share capital increased from Dh270 million to Dh300 million through a rights issue.
The company plans to expand its activities to real estate investments, construction and facility management, industrial and mining activities, and healthcare. Reflecting the new profile, the firm will change the name to 'Emirates Reem Investment Company'.
Nevertheless, it's worth noting the shares have run up quite a bit and the current market cap of Dh536 million is much more than the proposed paid-up capital of Dh300 million. The authorised capital is not a useful metric as there is no assurance it will raise the capital.
The other top gainers so far are Abu Dhabi National Takaful (29.49 per cent), Agthia Group (24.71 per cent), Gulf Pharmaceutical (24.06 per cent), RAK Properties (18.96 per cent), Easy Lease Motor (18.18 per cent), du (14.78 per cent) and Ras Al Khaimah Poultry (14.48 per cent).
DFM shares also seem to be buoyed by recent regulatory changes, which will eventually see local joint-stock companies' listing. As per the new decree, all local public joint-stock companies established in Dubai should list their stocks on local Dubai bourses, including DFM and Nasdaq Dubai.
This includes companies registered under free zones. Privately-owned companies would be required to comply with all the listing regulations.
The decree stipulates that all the companies subject to this decree should change their status within one year of issuance date. The total number of listed securities on both the Dubai bourses - Nasdaq Dubai and DFM - is less than 100.
- Vijay Valecha is Chief Investment Officer at Century Financial.