Tadawul: Cement shares up on hopes for export liberalization

Updated 01 December 2015
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Tadawul: Cement shares up on hopes for export liberalization

JEDDAH: The Saudi Tadawul All-Share index edged up 0.2 percent on Sunday.
The cement sector index climbed 1.5 percent and Saudi Basic Industries Corp. (SABIC), which has a major steel producing affiliate, rose 0.3 percent.
Saudi Arabia is considering lifting partial export bans on cement and steel to relieve oversupply in the local market, economic news website Al-Eqtisadiah quoted a customs department official as saying.
That could help to ease producers’ problems as the local construction industry struggles because of state spending cuts due to low oil prices.
Most of the stock market moved little, however. Data released late on Thursday showed growth in Saudi money supply and bank lending in October slowing to its lowest levels since late 2010.
In Abu Dhabi, Dana Gas soared its 15 percent daily limit after saying a tribunal of the London Court of International Arbitration, ruling in a six-year dispute, had directed the Kurdish regional government in Iraq to pay $1.98 billion to a consortium including Dana within 28 days.
After the close, however, the Kurdish government said Dana’s description of the ruling was misleading and incomplete and that many issues remained unresolved. It said it still had counter-claims worth over $3 billion against Dana, and that the tribunal would hear them in the next phase of arbitration.
Abu Dhabi’s stock index dropped 1.1 percent as heavyweight National Bank of Abu Dhabi, the emirate’s biggest bank, tumbled 6.0 percent.
Sebastien Henin, head of asset management at Abu Dhabi’s The National Investor, said fresh corporate news did not appear to be behind the move, so the drop seemed to be the result of a large sell order going through in otherwise thin volumes.
United Arab Emirates markets will be closed for National Day Holidays on Wednesday and Thursday. “With a smaller number of market participants any sell order will be amplified, given there are no buyers on the other side,” Henin said.
Etisalat, which will join MSCI’s emerging markets index at the end of this month, dropped 2.6 percent after rising in the run-up to MSCI’s decision to include it.
Dubai’s index fell 0.3 percent as property and construction firms remained soft because of signs of an economic slowdown in the region; Emaar Properties lost 1.0 percent.
However, Al-Salam Bank — Bahrain rose 1.0 percent to 0.934 dirham in unusually heavy trade after a regulatory filing revealed a key person in the bank, which is also listed in Bahrain, had bought 100,000 shares at 0.097 dinar per share last week.
Qatar’s index edged up 0.3 percent though Qatar Gas Transport (Nakilat), also due to be included in MSCI’s emerging markets index at the end of this month, dropped 0.5 percent. It was the most heavily traded stock.
Egypt’s stock market rose on Sunday as a new central bank governor took office, increasing hopes that the country’s foreign exchange crisis can be resolved, while bourses in the Gulf were mostly sluggish.
Tarek Amer, a well-regarded former commercial banker, was to head the first meeting of the Egyptian central bank’s new board on Sunday.
Many people expect him to work with the government to try to end a foreign currency shortage by regulating imports and supporting exports, which could benefit many listed firms. He is expected to be more generous in allowing the private sector to obtain foreign exchange.
Bolstering investor sentiment, the central bank kept the Egyptian pound steady at its foreign currency auction on Sunday and the pound rose slightly in the black market.
But with Egypt’s tourism revenues hit by last month’s apparent bombing of a Russian passenger plane over the Sinai, Amer faces a very difficult challenge, and many economists think a devaluation of the Egyptian pound is inevitable at some stage.
The Egyptian stock index climbed 0.8 percent with United Arab Stevedoring, which could benefit from any increase in trade through Egypt’s ports as a result of changes to foreign exchange policy, gaining 2.6 percent in unusually heavy trade. Canal Shipping Agencies rose 4.2 percent.
But Ezz Steel fell 1.4 percent to 8.28 Egyptian pounds.
Blom Egypt Securities downgraded it to a “sell” rating with a target of 7.45 pounds, citing its continued losses and saying it had weak prospects.


Slack primed as latest unicorn to make market debut

Updated 10 min 56 sec ago
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Slack primed as latest unicorn to make market debut

  • Slack is a cloud-based software company that markets online tools for information sharing and workflow management
  • Current customers include Nordstrom, Ford and HSBC and the company has more than 95,000 paid customers overall
NEW YORK: The 2019 parade of big new Wall Street entrants continues this week with the debut of Slack Technologies, underscoring investor hunger for new companies in spite of some high-profile stumbles.
Nearly halfway through the year, US markets are on track for one of the biggest IPO seasons ever in terms of money raised following a stream of offerings from former “unicorns,” private companies worth more than $1 billion.
Yet two of this year’s biggest names — Uber and Lyft — currently trade below their IPO price, along with Snapchat, which has lagged its initial price for most of the time since it went public in March 2017.
Still, there have also been plenty of prominent companies that have risen since their initial public offerings, including jeans company Levi’s, Tradeweb Markets, which builds electronic marketplaces, Zoom Video Communications, and mobile application and software system Pinterest.
The most dramatic jump has been in food company Beyond Meat, which now trades at more than six-fold its entering price.
“The public has a huge interest” in new companies, said JJ Kinahan, chief market strategist at TD Ameritrade, adding that the mixed performance of the 2019 ex-unicorn class is comparable to that of the broader market.
“There aren’t a lot of other choices besides IPOs for investors seeking growth,” said Gregori Volokhine, president of Meeschaert Financial Services, who attributes the rush of funds in part to central bank policies promoting liquidity.
“There’s an excess of underinvested funds worldwide,” he said.
In terms of sheer volume, the number of IPOs in 2019 so far — 93 — is roughly equal to last year’s figure, according to Dealogic.
But the funds raised, $34.5 billion, stand 13.6 percent above last year’s sum and the highest for the comparable period since 2000, according to Dealogic data.

Direct listing
A cloud-based software company that markets online tools for information sharing and workflow management, San Francisco-based Slack parts ways from the other big companies this year by opting for a direct listing instead of an IPO.
This approach, which was also employed by Spotify last year, cuts down on fees to investment bankers in IPOs. Although existing shares can be sold, a direct listing does not issue new shares, averting share dilution but also forgoing the new funds raised in an IPO.
The process can also be riskier in terms of share price volatility compared with an IPO, where underwriters line up investors in advance. In a direct listing, shares are exposed more directly to the open market.
Slack chief executive and co-founder Stewart Butterfield described the company’s technologies as a “brand new category of software” that replaces email in a company.
Current customers include Nordstrom, Ford and HSBC and the company has more than 95,000 paid customers overall.
“It turns email to messages and organizes them into team, project and topic based channels instead of individual in-boxes,” Butterfield said in a June 10 earnings conference call.
“It’s a team-first approach to communication, in contrast to email’s individual first approach. It creates a rich, searchable, permanent body of information that’s widely available across an organization, even for people who just joined the team.”
Unprofitable three years
The company, which is expected to be valued at around $17 billion when it enters the market on Thursday, reported revenues of $134.8 million in the quarter ending April 30, up 66.7 percent from the year-ago period.
But Slack, which has been unprofitable the last three years, reported a $33.3 million loss during the period, 34 percent more than last year’s loss.
Of course, many unprofitable companies have gone public and done well in markets for years. Yet the heavy losses and murky profit outlook at Uber and Lyft have been seen as factors in their lackluster performance since going public.
But investors remain keen on growth stories following the success of Amazon, Facebook and other tech giants that have emerged in recent decades.
A key beneficiary of this desire has been Beyond Meat, which has multiplied in value many times since going public May 3 at $25 and currently is priced at $168.92. The company has been seen as a main beneficiary of the growing alternative protein market, which some analysts think could top $100 billion in the coming decade or so.
Kinahan said in general investors have wised up after the early 2000s Internet bubble but that “it’s just unnatural” for stocks like Beyond Meat to move in an unbroken straight line upwards.
“There’s a healthy bit of skepticism in the market,” he said. “However, certain companies have maybe gotten a little ahead of themselves.”