IPOs and Dividends Attract Yield-Hungry Investors in GCC

IPOs and Dividends: Wali Khan is a Pakistani telecoms engineer who lives in the UAE, he has been investing in Emirates stocks for four years.

Over the past few years, several new investors have come to the UAE’s two main stock markets, the Dubai Financial Market (DFM) and the Abu Dhabi Securities Exchange (ADX).

The reason behind the growth in the number of investors in the Arab world’s second-largest economy is because of the strong momentum of initial public offerings, appealing valuations, and good dividend payouts from listed companies.

In the first half of 2024, around 72,583 new investors flocked to the DFM as it is the home to the largest property companies such as Emaar Properties, and Emirates NBD which is Dubai’s largest bank.

Because of this, the economy in the emirate grew significantly along with the number of trade and prices of the stocks.

Last Year, the Abu Dhabi Securities Exchange which is the second-biggest Arab stock market recorded 50,000 new investors.

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As per the most recent ADX data, the second-biggest stock market trading volume went up by 37% and foreign ownership of ADX-listed companies increased by 35%.

According to the reports, the companies in the Arab market raised around $890 million via IPOs during the second quarter of this year.

The listings number and investors’ interest have increased significantly in bourses in the other five states of the six-member bloc of GCC.

Most of the initial public offerings (IPOs) were recorded in Saudi Arabia, which comprises of biggest companies like Saudi Aramco, Saudi National Bank, and Al Rajhi Bank.

Companies in Saudi Arabia raised around $1.6 billion from their IPOs during the period.

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However, in the UAE, listed companies are valued less than some of their peers in other emerging markets which made Mr Khan invest in these companies.

Wali Khan currently owns shares in Emaar and Air Arabia and his collection of UAE stocks is worth Dh60,000 ($16,337).

Wali Khan said, “The UAE has been proactive in its economic diversification efforts. These initiatives have not only strengthened the local economy but also increased the appeal of UAE stocks as part of a diversified investment portfolio.

He further added, “The country has a well-regulated financial market. Its robust infrastructure, coupled with government policies that encourage foreign investment, further bolsters my confidence in the long-term prospects of its stock market.”

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