Dubai Investments looks to raise foreign ownership

24 March 2014

Dubai Investments considering foreign ownership limit increase from 20 to 35 per cent

Dubai Investments is considering an increase of its foreign ownership limit from 20 per cent to 35 per cent.

Shareholders of Dubai’s largest listed firm will be able to vote on the proposal on 15 April.

Companies in the UAE and Qatar are increasingly seeking higher foreign ownership limits as both countries’ stock markets gear up for their MSCI upgrade to emerging markets status in May. The index compiler sets out a minimum requirement of shares open for foreign trade, forcing companies to individually raise their levels if they want to be included on the emerging markets index.

In February, UAE-listed Deyaar Development, Mashreq and Dubai Islamic Bank announced they were looking to raise the amount of shares that can be held by foreigners. In Qatar, several banks made similar moves with Commercial Bank of Qatar and Qatar Islamic Bank stating in 2013 they were seeking regulatory approval to increase foreign ownership.

High investor demand is another reason behind the much-needed increase in shares available for trade.

A series of initial public offerings (IPOs), including those of Emirates REIT and Marka, are set to cater to some of that demand and improve diversification among listings on the UAE markets. IPO activity in Qatar remains low, although activity is slowly picking up after the $880m offering by Qatar Petroleum’s Mesaieed Petrochemical Holding Company.

Dubai Financial Market, Abu Dhabi Securities Exchange and Qatar Exchange have risen exponentially since the beginning of 2013, with many stocks reaching overbought levels where a high share price is no longer justified by the company’s fundamentals alone.  

Stock gains are partly fuelled by positive sentiment surrounding the region’s economic recovery, as well as events such as the UAE’s World Expo 2020 win, which is set to lift its economy even further.

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