Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Analysis-DAMAC delisting plan piles pressure on shrinking Dubai market

Stock MarketsJun 15, 2021 12:11AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
3/3 © Reuters. FILE PHOTO: A woman walks through the Dubai Financial Market after Joe Biden won the U.S. presidency, in Dubai, United Arab Emirates November 8, 2020. REUTERS/Christopher Pike/File Photo 2/3

By Hadeel Al Sayegh and Saeed Azhar

DUBAI (Reuters) - Dubai's stock market is set for another delisting, raising a question mark over the future of one of the Gulf's major exchanges, which was launched two decades ago.

A $595 million bid to take DAMAC Properties private by the firm's founder Hussain Sajwani is the latest blow to the exchange, even as the Gulf city state's property market showed signs of life in the first quarter.

"It is not that Dubai is becoming less attractive. Alternatives are becoming more attractive," Khaled Abdel Majeed, founder at London-based Mena Capital LLP, told Reuters.

Majeed said Dubai needs to work harder to attract listings amid growing competition from within the Gulf region such as Abu Dhabi and Saudi Arabia where Tadawul, the region's biggest exchange based on market value, wants to become a regional hub.

While the value of traded stocks in Dubai was once higher than rival Abu Dhabi, this changed in 2019 and ADX now has a more than four times higher average daily traded value.

ADX has also seen gains after its owner, ADQ, launched a market maker last year that tapped into a fund to boost liquidity on the bourse.

"It's disappointing from a market point of view that you have companies de-listing ... at a time when we think the market needs added depth, more companies, which has not been happening since 2014-2015," Mohammed Ali Yasin, chief strategy officer at Al Dhabi Capital in Abu Dhabi, said of the Dubai stock market.

Since the start of 2020, two prominent Dubai companies have de-listed from the Dubai Financial Market (DFM) and Nasdaq Dubai: Dubai parks operator DXB Entertainments and Dubai ports operator DP World.

And shares in Arabtec, once a high-flying Dubai construction company, were suspended in September after its shareholders voted to dissolve company.

Emaar Malls, operator and owner of the world's largest shopping centre, in March said it planned to offer to buy out minority shareholders and merge with Emaar Properties.

And Dubai real estate fund Emirates REIT, which is listed on the Nasdaq Dubai exchange, said in July it was considering de-listing.

Where Abu Dhabi is boosting liquidity through planned new listings and consolidation of assets of state holding company ADQ, Dubai appears to have become more tolerant of delistings, a Gulf M&A banker told Reuters. Analysts say the move to de-list spares companies having to face scrutiny from investors, along with the running costs of a listing and disclosure and transparency requirements.

"If someone wants to take (their company) private; this is the time," the M&A banker said.

Asked what steps, if any, it was taking to ensure that listed companies remained on the exchange and that it attracted new listings, the DFM declined to comment

Graphic: Value of stocks traded in Dubai versus Abu Dhabi:

The problem for listed Dubai real estate companies is that they are trading at a discount to the average price to earnings of the wider market, at around 8 times earnings, while the market is trading at around 20 times that.

"For DAMAC, I'm sure that the strategic investor, Hussain Sajwani, understands that the intrinsic value of the company is higher than the share price, Tariq Qaqish, chief executive of Salt Fund Placement in Dubai, said.

The two years leading to the COVID-19 pandemic exposed the vulnerabilities of Dubai's homebuilders and property companies, said Samer Haydar, director of corporate ratings at Fitch.

And despite signs of recovery, many are "still facing the aftermath of the pandemic in terms of negative working capital, rising leverage, weak liquidity and overall un-absorbed supply in the market," Haydar said.

($1 = 3.6728 UAE dirham)

Analysis-DAMAC delisting plan piles pressure on shrinking Dubai market

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email