Market get a boost: Etisalat 40 percent is open to investment by individual UAE citizens
News that restrictions on investment in United Arab Emirates telecommunications operator Etisalat will be loosened may boost Abu Dhabi’s market on Tuesday, while other bourses may have a modestly positive tone.
At present, the government’s Emirates Investment Authority (EIA) owns 60 percent of Etisalat and the remaining 40 percent is open to investment by individual UAE citizens.
Etisalat said late on Monday that local and foreign institutions and expatriate individuals would be allowed to buy up to 20 percent of the company, though it did not say when the change would take effect. Etisalat added that the EIA had no intention of reducing its stake for now.
The announcement is likely to be taken as a positive sign that Abu Dhabi is willing to open its market wider to stimulate activity, and could boost Etisalat’s share price, which rose in recent days to a multi-year high of AED12. At a forward price/earnings ratio of about 11 times, Etisalat is on par with Saudi Telecom and cheaper than Qatar’s Ooredoo at nearly 16 times.
Shares in Dubai-listed telecommunications operator du could suffer if investors anticipate money will flow from it to Etisalat.
Other Gulf markets may have a positive tone with Asian stock markets firm on hopes for a Greek debt deal. Oil prices are little changed from Monday’s levels but a Greek deal could boost them, at least in the short term.
Dubai’s index climbed 1.0 percent to 4,135 points on Monday as trading volume tripled from Sunday’s very low level. The index rose above technical resistance on its 200-day average, now at 4,099 points; and any clean break – at least two straight daily closes above that mark – would be a bullish signal.
Another factor buoying Gulf markets other than Saudi Arabia in recent days is the fact that the opening of the Saudi market to direct foreign investment on June 15 has so far drawn only tiny fund flows into the Riyadh bourse. This has eased fears that Saudi Arabia could suck funds from other markets.
The Saudi index fell 0.7 percent to 9,275 points on Monday, after dropping on Sunday below its 200-day average, now at 9,424 points – a bearish technical signal. The average now acts as immediate resistance.
In Oman, thinly traded Al Madina Insurance could attract some interest after saying it plans to acquire domestic rival Vision Insurance. Financial details were not given.
Source: Arabian Business – Stock markets: Etisalat opening to foreigners may boost Abu Dhabi
