Equities, debt market to boost GCC outlook

This week, the GCC markets exhibit numerous enticing prospects and themes


Somshankar Bandyopadhyay

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Published: Mon 3 Jun 2024, 6:18 PM

Last updated: Mon 3 Jun 2024, 6:19 PM

This week, the GCC markets exhibit numerous enticing prospects and themes, fuelled by heightened IPO endeavours, and the ongoing progress within the GCC region, analysts say.

Alef Education IPO shares demand on the rise as subscription period end nears:

Alef Education is set to get listed on the main market of ADX on 12th June 2024, with the first tranche offer period to end on 4th June 2024, and second tranche offer to close on 5th June 2024. However, the Company announced on Friday that it plans to increase the number of shares offered to the first tranche to 140 million, from 112 million. “This underscores the increased interest from institutional investors in the company’s stock, which signals confidence in the IPO and the company’s future performance in the market,” Vijay Valecha, chief investment officer, Century Financial, said.

Saudi Arabia takes the lead in emerging debt market:

The Saudi government has achieved a significant milestone by successfully issuing $5 billion in sovereign sukuks, which has garnered remarkable investor demand exceeding $20 billion. This exceptional response underscores high confidence in the Saudi economy. Notably, this issuance stands out for its innovative three-tranche structure, with maturities set for 2027, 2030, and 2034, marking a first for the Kingdom. By adopting this multi-tranche approach, Saudi Arabia aims to broaden its funding base beyond conventional channels, thereby reinforcing its foothold in global debt markets. This strategic move not only diversifies funding sources but also bolsters the country’s financial standing on the international stage. The issuance is part of Saudi Arabia’s ambitious goal to secure a total of $37 billion in funding this year. “With these funds, Saudi Arabia is poised to accelerate progress on critical projects, paving the way for sustainable growth and development in line with its visionary economic objectives,” Valecha said.

High demand for Aramco 12 billion stock offer:

Saudi Aramco’s stock saw increased activity on Sunday as the $12 billion share sale was rapidly fully subscribed, marking one of the largest share sales globally since the company’s listing. The proceeds from the sale will support Saudi Arabia’s efforts to diversify its economy, focusing on sectors such as artificial intelligence, sports, tourism, and flagship projects like Neom.

A significant selling point of the offer is the opportunity to access one of the oil industry’s largest dividends. Investors stand to benefit from a projected $124 billion annual payout, translating to a dividend yield of 6.6 per cent, according to Bloomberg Intelligence. This share sale comes at a time of robust demand for new offerings in Saudi Arabia. In recent weeks, four companies collectively attracted orders totaling $176 billion for their IPOs, reflecting strong investor interest in deals offering potentially high returns, a trend observed over the past two years.

Positive effects of RTA’s commercial and transportation strategy:

Dubai RTA has unveiled the Dubai Commercial and Logistics Land Transport Strategy 2030, which aims to double this sector’s contribution to Dh16.8 billion over the coming years. The overall strategy especially emphasizes adopting and integrating digital technology infrastructure with the core set-up by 75 per cent, reducing emissions by 30 per cent and improving operation efficiency. The new strategy has announced a list of 17 projects to make Dubai’s overall transportation and logistics costs more competitive. This would in turn imply more new business setups, thereby increasing the transportation sector’s contribution to the economy. “This initiative is expected to bode well for companies like Aramex PJSC and Salik Co PJSC, who would potentially see their revenues and profitability increase substantially,” Valecha said.

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