Equity markets in the Middle East are waking from their slumber as oil prices rise.
This year is turning out to be a year to remember for stock markets in the Arabian Gulf. Two years after the record-breaking initial public offering (IPO) of energy giant Saudi Aramco, the region is set for a busy period in terms of both the number of companies coming to market and the sums likely to be raised.
Two factors explain the surge. First, Saudi Arabia’s ambitious Vision 2030 economic and social development plan has seen a resurgence of momentum, as Covid-19 infection numbers fall and oil prices trade near three-year highs, with the privatisation of key assets back on the agenda. IPOs of digital services provider Solutions by STC and renewable energy firm ACWA Power are on course to raise a combined $2bn.
Second, the Abu Dhabi Securities Exchange (ADX) is on track for a record number of listings, with government entities putting up stakes in an attractive slate of state assets on the local bourse, among them regional oil drilling giant, Adnoc Drilling, and ports and logistics operator Abu Dhabi Ports. The sales appear against a backdrop of the stock market’s ‘ADX One’ strategy, unveiled in January, which aims to double its market capitalisation within three years.
Abu Dhabi’s initiatives come after a dearth of stock market listings across the region over the past six years, with Saudi Arabia a notable exception. Making matters worse has been a string of high-profile delistings in the UAE in particular, leading to concerns about the depth and breadth of local markets. Actions taken by authorities in Abu Dhabi have gone some way to deepening the local market, yet the question remains as to whether such initiatives can tempt the region’s larger private sector players to prioritise local exchanges over international bourses.
