Gulf Cement Company has been established primarily for the construction of a 5,000-tonne-a-day clinker line to meet soaring cement demand in the state. On offer – to nationals only – was 80 per cent of the company’s QR 800 million ($219.8 million) capital and shares were priced at QR 10 ($2.70) each. More than 195,000 share applications were received, raising some QR 5,950 million ($1,635 million). Allocations were announced on 27 April, with each subscriber receiving a guaranteed minimum of 250 shares plus 2.8 per cent of the additional application. Commercialbank managed the offering (MEED 10:3:06).

However, the rush to plough money into the IPO further depressed the DSM – already suffering from the region-wide correction. Trading volumes fell by about half during the sale, to some 300 million shares. And they are unlikely to stage an immediate recovery while investors await the return of their oversubscriptions. In the UAE, the regulator recently ordered that excess cash from IPOs be reimbursed within two weeks to bring liquidity back swiftly to the secondary market. ‘The process in Qatar has improved,’ says a Doha-based analyst. ‘It generally takes about a month for the money to be returned.’

The next planned IPO will be of shares in Al-Khaleej Bank, the second of two new banks being established in the state. The IPO of Al-Rayyan Bank took place to an overwhelming response in January and a listing is expected in June. The Al-Khaleej IPO had been due to take place by the end of the second quarter. However, analysts say that the offering is now unlikely to be staged so soon. ‘It is not considered wise given the current secondary market falls,’ says one.

The DSM is down by close to 20 per cent since the start of the year and fell by a further 2 per cent in the week to 26 April. ‘The general mood is weak,’ says the analyst. ‘All the Gulf markets are feeling a contagion effect from what is happening in Saudi Arabia.’ While the market slumps are being driven by sentiment rather than fundamentals, valuations on the DSM suggest that there is still considerable downside potential. Average price/earnings ratios are running at about 25.