26/11/2014 04:29 AST
The chief of the UAE stock market regulator wants more industrial companies to list their shares on exchanges dominated by property and investment firms.
Abdulla Al Turifi, the chief executive of the UAE Securities and Commodities Authority, also revealed that the regulator was reviewing applications for initial public offerings of up to four companies to list on the UAE bourses and another three applications for a new secondary market for companies that currently trade only “over the counter”.
Unlike formal stock exchanges, shares in companies traded “over the counter” are bought and sold between parties in deals arranged over the phone or by email without other investors needing to know the price of a particular transaction.
“We have some problems,” Mr Al Turifi said. “We don’t see industrial companies. That industry is not properly active in the financial market. Most companies are from the real estate and investment sectors.”
The UAE is seeking to broaden its industrial base and reduce its reliance on hydrocarbons, but the country’s two main stock exchanges are dominated by property and financial listings. Recent IPOs have come from retail, a sector also previously unrepresented on the exchanges. Emaar Malls Group, the owner of The Dubai Mall, raised Dh5.8 billion from investors last month. Marka, a retail-focused greenfield company, raised Dh275 million. Both offerings were heavily oversubscribed.
Elsewhere in the Arabian Gulf, by contrast, stock exchanges have a sizeable representation of industrial companies. Saudi Arabia has Sabic, the biggest petrochemicals maker in the Middle East, along with 13 other industrial firms.
Industries Qatar, the second biggest petrochemicals maker in the region, is listed on the Qatar Exchange.
In the UAE, the country’s largest industrial players across the metals and petrochemical sectors are closely held.
In a bid to encourage more offerings, the SCA and the Ministry of Economy issued a law in February requiring private joint stock companies, totalling about 130, to list their shares on a second market.
The move aims to provide a transition for companies to move from a private joint stock to public joint stock by preparing them with regulatory requirements, transparency and governance.
Shares of private joint stock companies trade “over the counter” at present.
The National Investor and Manazel yesterday were the first of 130 planned private joint companies expected to list.
“As when we started the market, there was a period where it wasn’t mandatory to list,” Mr Al Turifi said. “They were given a few years.
“We are looking to do the same process with the private joint stock companies. We created a separate market, with more lenient rules so they are not afraid. In the end it’s good for them, it increases governance and transparency and shareholders get more access to information than they would have in the past and they won’t be trading shares in cafes and resorts as they did before.”
Mr Al Turifi said the listing of small and medium enterprises on the second market would take time.
“We are studying about four to five companies for initial public offerings,” Mr Al Turifi said. I am expecting some of them in the beginning of next year. I would like to see, by the second half at least, three to four companies listed in the public market.”
The National
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