Gulf capital markets in focus as DFM doubles profits
The Gulf’s capital markets have remained hubs of activity amid inflation, geopolitical risk and higher interest rates. The how and why of this story will be in focus on Wednesday in Dubai as the two-day Capital Market Summit gets underway.
The Dubai Financial Market is set to host government officials, investment bankers and business leaders to identify what’s driving the market and explore trends in sustainable investing, fintech, digital transformation and market resilience.
Helal Saeed Al Marri, Chairman of the DFM, is slated to be in conversation with May Nasrallah, Founder and Executive Chair of corporate advisory firm deNovo Partners on Wednesday.
Also on the agenda are Jim DeMare, President of Global Markets at BofA Securities; Claire Suddens-Spiers, a 27-year veteran and Co-Head of Equity Market Solutions at Rothschild & Co.; and Michael Wilson, Chief U.S. Equity Strategist and Chief Investment Officer at Morgan Stanley.
The DFM reported strong quarterly earnings today, more than doubling net profit year-on-year to $24 million amid a surge in foreign investor activity. The exchange operator attracted 44,259 new investors, of which 85% were from abroad.
Institutional investors’ share of trading value reached 65%. The imminent IPO of Spinneys on May 9 on the DFM is expected to raise up to $376 million for the UAE and Oman grocery retailer. The total number of shares offered to retail investors has been increased by 7% as of today on strong investor demand.
Saudi Arabia promotes Tadawul market’s strength amid IPO boom
Saudi Arabia is touting the strength of its stock exchange as the Saudi Capital Markets Forum gets underway today in Riyadh. The two-day forum is being hosted by the Saudi Tadawul Group, the parent company of the kingdom’s main stock exchange that goes by the same name, which had a market cap of $2.9 trillion at the end of January.
The kingdom has sought to attract foreign investment through its capital markets by implementing reforms, aligning regulatory frameworks with international standards and gaining inclusion in major global indices while at the same time pursuing investor outreach and investing in technology and infrastructure, according to Saudi Tadawul Group CEO Khalid Al-Hussan.
The hard work appears to be paying off. IPOs in Saudi Arabia and the UAE have been booming since late 2021. The total number of shares traded on the Saudi exchange exceeded 8 billion in January, an almost fourfold increase from the prior January, according to data published by the exchange.
“Momentum is great, and all the indications so far for 2024 are excellent,” SNB Capital’s Head of Investment Banking Zaid Ghoul said in an interview with Bloomberg, highlighting a surge in share trading in recent months. The level of activity is encouraging more firms to prepare for IPOs, Ghoul said.
The Saudi Tadawul is also looking beyond capital markets. Last month, it announced plans to buy a 33% stake in the Dubai Mercantile Exchange, bolstering its position in global commodities markets. Once the deal closes, Saudi Tadawul will become the largest shareholder next to the CME Group and the exchange will be rebranded as the Gulf Mercantile Exchange.
Thinking shorter term: Most major stock markets in the Gulf fell in early trading today after data showed U.S. producer prices increased more than expected in January, adding to concerns over inflation and dampening hopes for early rate cuts by the Federal Reserve, Reuters reports. Most GCC countries, including Saudi Arabia and the UAE, peg their currencies to the U.S. dollar and follow the Fed’s policy moves closely.
