Oil, security and IPOs loom large in Dubai Financial Market US roadshow

In a couple of weeks, a top-level delegation from Dubai Financial Market, accompanied by the cream of the emirate’s listed companies, will touch down at John F Kennedy International Airport in New York to begin two days of intensive meeting with American investors.

The “investment roadshow” has been a regular fixture since its launch in 2007 in London. It gives an opportunity for the Dubai market and Dubai corporates to get up close and personal with the biggest institutional investors in the world.

Formal presentations by the DFM authorities, led by Essa Kazim, the chairman, and the big hitters such as Emaar Properties, Emirates NBD and DP World (the latter is listed on Nasdaq Dubai, but shares a common trading platform with DFM companies) are followed by a whirlwind of one-to-one meetings that is virtually financial “speed dating”. It’s a gruelling schedule.


I attended that first event in London, thanks to a kind invitation from the sponsors at the time, Deutsche Bank, and recall a far more genteel affair. Presentations and face-to-face meetings, yes, but they were all in the rather more relaxed atmosphere of a grand old guild building in the City, over canapés and drinks.

The forthcoming New York meetings are being organised by Bank of America Merrill Lynch in the hothouse environment of Wall Street. The atmosphere in downtown Manhattan is likely to be far more frenetic than it was in 2007.

It’s not just the venue, and the sponsor, that have changed this time. The autumn of 2007 quite rightly deserves the epithet “halcyon”, before the storm that broke in global financial markets the following year.

The conversations I had with institutional investors back then all revolved around the theme of unrealised and untapped potential. Many of them were simply unaware of the investment opportunities available in Dubai; many of them confused Dubai, Abu Dhabi and Doha for one another; most had never heard of the DFM.

But the main reaction was one of surprise at the investment opportunities. Having been through their own equity slump in 2005 and 2006, Dubai shares still looked pretty cheap. The Dubai story – as explained by Emaar for example – was still one of explosive growth.

I distinctly remember one investor saying to me: “You live there, is it really like that? What’s the catch?”

The catch, of course, followed the next year when Dubai was badly hit by the global crisis and suffered its own financial crunch the year later. Many of those adventurous foreign investors back then would end up with badly burnt fingers.

But it does not seem to have put them off Dubai. On the contrary, foreign investors now comprise 47 per cent of the DFM’s traded value, a figure that has risen every year since 2010.

The point is this: in New York, the DFM and Dubai corporates will largely be talking to the already invested, the convinced if you like, and the dynamics of those investor relations are different.

The investors have had time to get to know the market and the situation of individual corporates. They can ask better, informed questions. They might even be able to make suggestions for better corporate performance.

What they will want is specific information on three main areas: oil, security and initial public offerings.

On all three, Dubai has a good story to tell. Falling oil prices do not directly impact the economy, which is still growing at nearly 5 per cent a year, according to official figures. But the knock-on economic effect of lower regional revenues will require careful explanation.

On security, Dubai is likely to highlight its status as a regional “haven”, which has stood it in good stead since 2011. It will point out that the violent extremism elsewhere in the region has so far not blighted the UAE.

On IPOs, Dubai will also have an improving story to tell. Two Dubai-based companies – ASGC and Network International – are considering share listings that could kick-start the IPO market, dormant for the first nine months of the year. Others are likely to follow.

The other question on investors’ lips in 2007 – on the prospect of a merger between the Dubai and Abu Dhabi stock exchanges – looks as far away from resolution as ever.

fkane@thenational.ae

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