Corporate heavyweights like Emaar, Emirates NBD and DIB are expect to buoy the sentiment. Image Credit: Virendra Saklani/Gulf News

Dubai: Will the UAE’s stock market investors seek the safety of blue-chips as the corporate reporting season starts in earnest in the coming days? Or will investors feel the jitters that markets elsewhere have been experiencing?

Ahead of the closing on Friday for the Eid Al Adha holidays, there were signs that UAE investors were seeking out companies likely to come up with upbeat first-half 2022 results. Emaar closed 5.11 per cent higher to Dh5.14, DIB was up 1.49 per cent to Dh5.43, and Emirates NBD was at Dh11.85, up 0.42 per cent. A similar sentiment was played out on ADX too.

While Emaar is expected to deliver another round of solid growth numbers riding the Dubai freehold buying wave, Emirates NBD and DIB’s numbers are expected to reflect the solid gains the banking sector has been having.

“The H1-2022 results in the coming days will dictate investor vibes, but they will still have to contend with another US Federal Reserve rate hike later in the month,” said a market analyst. “And with that, there is always the feeling that a recession could be on the way.”

Iridium Advisors in its latest note says: “Market participants will likely take cues from global equities and crude oil price movements as they reopen, whereas some earning reports might also trickle in.”

Will Empower be next?

Bloomberg has reported that Dubai’s next IPO could be from the district cooling giant Empower. In recent months, Empower has been consolidating the district cooling capacity across landmark developments in the city, including at the Palm. An IPO from Empower will also have DEWA investors buzzing, with the utility giant being a major shareholder in the former.

Tecom needs a booster

The Tecom Group listed on DFM earlier this month after a substantial IPO, drawing in record oversubscription from retail investors. The stock price - which listed at Dh2.67 - however came under immediate pressure as investors weighed in recession risks, a drop in oil prices, etc.

The mood is not confined to the UAE, with a leading Saudi group - Abdullah Al Othaim Investment Co. - dropping plans to go ahead with a possible $1.5 billion IPO of its malls unit. Market sentiments were cited as the reason. Saudi Arabia had seen more than 20 IPOs since the start of the year.

Junaid Ansari
Junaid Ansari of Kuwait’s Kamco Invest says Saudi and GCC markets have performed better compared to international bourses, which have mostly given negative returns.

But Junaid Ansari, Senior VP for Investment Strategy and Research at Kuwait’s Kamco Invest, says not much should be read into the IPO pullout decision. “We acknowledge the reason cited by the company as markets have been on a downward trend for a while,” said Ansari. “The TASI is down 18 per cent since its peak in May, which almost fully wiped off gains since the start of the year. “Nevertheless, when compared to international markets, Saudi and the GCC perform much better with either flat or positive returns as compared to negative returns for most major equity markets globally. For instance, the MSCI World index is down 20.8 per cent and the US market is down 19.7 per cent since the start of the year.

“The Abdullah Al Othaim Investment Co’s IPO was delayed back in May - the ripple effects have not been felt as there have been at least six new listings since May on the Saudi Exchange. The IPO pipeline remains unaffected despite the Tadawul index decline.”

Summer usually tends to be quite the quiet period for IPOs. So, if Dubai comes up with the Empower float plan, that will be a break from the norm. Ansari reckons that Q4-2022 will be the crunch phase for IPO activity to get back into full steam ahead mode. Of course, depending on market and investor sentiments at the time.