The rush to buy stock in the Arab world’s second-biggest telecommunications provider before it opens to foreign investors sent the number of shares traded to the highest in 17 months within the first 30 minutes of trading.
Investors bought about 7.5 million shares of Emirates Telecommunications Corp. as of 10.30am in Abu Dhabi, triple the 12-month daily average and the most since February 2014. The stock climbed 14 per cent to the highest since July 2005, bringing its increase to 32 per cent since the company said late on Monday that the UAE’s government agreed to allow foreign ownership of shares. Abu Dhabi’s ADX General Index rose 2.8 per cent today.
“A lot of local investors want to be positioned before the foreign flows start,” Sebastien Henin, the head of asset management at The National Investor in Abu Dhabi, said by telephone. “The visibility on when foreigners will be allowed eventually in is not so great, but investors don’t care and they want to buy now.”
The UAE is lifting the restriction on condition that foreign holdings don’t exceed 20 per cent, and the change will come into force after “additional legal and legislative procedures,” according to Etisalat. The government owns 60 per cent of the company through the Emirates Investment Authority, its only sovereign wealth fund, and has no intention of reducing its stake for now, the phone operator said.
Lifting the restriction means Etisalat may be considered for inclusion in MSCI’s emerging-markets index, EFG-Hermes Holding said in an emailed note to clients on Tuesday. The company could account for 0.14 per cent of the gauge and see about $360 million in passive inflows from inclusion, according to the Cairo-based investment bank.
Etisalat’s stock was suspended from early in Monday trading until about midday on Tuesday.
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