JEDDAH, 3 April 2005 — Saudi investments in Dubai stock exchange are expected to cross six billion dirhams, according to financial analysts who noted that Saudis have started buying shares in large numbers.
UAE regulations allow citizens of GCC countries to exchange stocks and bonds. The strong Saudi presence at Dubai bourse has considerably influenced the market, said the analysts quoted by Al-Eqtisadiah business daily.
Eissa Kazim, director general of the Dubai Stock Exchange, said his organization welcomed Saudi investors. “We prefer Gulf investments, especially from Saudis, in stocks of companies listed on the bourse,” he said. He denied a report carried by Saudi newspapers that the market would take measures to prevent dominance of Saudi investors.
The number of Saudi investors in the bourse reached 2,843 from a total of 4,180 GCC investors by the end of last year. “We don’t have any plan to control investments of a particular nationality,” he stated.
Kazim estimated total investments of Saudis in the market at four billion dirhams by the end of last year as they exchanged 605 million shares and own 9.47 million shares. He expected that Saudi investments this year would rise by 50 percent to reach six billion dirhams.
Zuhair Al-Kaswani, director and partner of Sharhan Stocks Company, said the Dubai stock market was attracting a large number of investors, especially Saudis. The coalition between Emaar Middle East, a real estate company, with Al-Oula Development Company of Saudi Arabia, had encouraged many Saudis to invest in Emaar stocks, he pointed out.
The UAE stock market has done very well in the last two years and the capitalization has been positively helped by a 97 percent increase in the prices of stocks in 2004.
In 2004, initial public offerings (IPOs) in the UAE were oversubscribed by a weighted average of more than 180 times.
The first quarter of the current year witnessed an unprecedented surge in the total value of the local stock market transactions to 53.9 billion dirhams, representing 80 percent of the total value of transactions during 2004 at 67 billion dirhams.
Several companies have adjusted the nominal value of their shares to one dirham, allowing opportunities for small investors to diversify their holdings.
Many companies have announced sizeable dividends and increases in the paid-up capital. Economic and market analysts have mainly attributed the increase in the value to the strong surge in paid up capital in a number of companies.