x Abu Dhabi, UAESunday 21 January 2018

Emerging markets specialist says merger would boost UAE bourses

The emerging markets investment guru Mark Mobius is bullish on Arabian Gulf stocks.

An emerging markets investment guru is still bullish on stock markets in the UAE even after Dubai’s equity measure almost doubled this year. Mark Mobius said a merger of the two main exchanges in the country would benefit financial markets here.

“For Abu Dhabi and Dubai I think it will materialise, not tomorrow but it will definitely materialise,” Mr Mobius, the executive chairman of Templeton Emerging Markets Group, said yesterday.

“There is no reason why you should have two bourses, these two bourses should be merged. You’d have more liquidity, more chances to list new companies and when you get down to it. There is a rationale for the Arab-speaking world to have one market.”

Shares on the Dubai Financial Market (DFM) surged last month following reports that advisers had been hired for a planned merger with the Abu Dhabi Securities Exchange (ADX).

Speculation over such a deal first surfaced in May 2010, but no progress has been made public since the initial announcements from both bourses.

The UAE has three stock exchanges: the ADX, the DFM, and Nasdaq Dubai. The latter has been incorporated into the DFM.

Dubai’s main stock index has gained 76 per cent this year, while the ADX has advanced 45 per cent. Still, Mr Mobius says there is still value in UAE equities as the economic fortunes of the country improve following the global financial downturn and investments from the broader Middle East pour into the country after the Arab Spring.

Even though the book value of banks has more than doubled, UAE lenders still boast attractive margins and profitability, Mr Mobius said. Property prices were likely to continue gaining incrementally.

“You have to remember where they came from, they had been pushed very low too,” he added. “We’re still hanging on to stocks that we have and not selling them.

“There’s a lot of money out there and particularly with all the turmoil in Syria and all the rest of the Middle East a lot of money is coming here to be invested … [but] there will be corrections along the way.”