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Etisalat share rally continues

Trading was brisk all throughout the trading session as investors were tumbling over each other in booking orders, in anticipation of huge financial gains to be made in the scrip.

Abu Dhabi — The shares of Emirates Telecommunication Company, or etisalat, gained Dh0.70 on the second day of the landmark decision that allowed foreign investors to own up to 20 per cent in the company.

Trading was brisk all throughout the trading session as investors were tumbling over each other in booking orders, in anticipation of huge financial gains to be made in the scrip.

The stock climbed 5.1 per cent to the highest since May 2008, bringing its increase to 21 per cent in the two trading sessions, Bloomberg newswire said.

According to a share trader, in less than an hour into the trading session, buying reached the highest levels in 17 months. The share price rose 15 per cent on Tuesday, closing at a seven-year high of Dh13.80.

There was a bullish mood at the Abu Dhabi Securities Exchange as the main components of the ADX General Index showed strong growth as the telecom sector registered 173 per cent gains followed by banking (50.96 per cent), real estate (31.45 per cent) and industries (32.49 per cent). The energy and insurance sectors, however, dropped slightly.

The ADX general share price index rose 65.90 points or 1.39 per cent to 4,821 points. Over 7.5 million shares of etisalat traded as of 10:30am in Abu Dhabi, triple the 12-month daily average and the most since February 2014, said Bloomberg.

Out of a total 75.33 million shares traded on the ADX, etisalat’s contribution was 13.8 million.

“A lot of local investors want to be positioned before the foreign flows start,” Sebastien Henin, the head of asset management at The National Investor. “The visibility on when foreigners will be allowed eventually in is not so great, but investors don’t care and they want to buy now.”

The UAE is lifting the restriction on condition that foreign holdings don’t exceed 20 per cent, and the change will come into force after “additional legal and legislative procedures”, according to etisalat.

The government owns 60 per cent of the company through the Emirates Investment Authority, or EIA, its only sovereign wealth fund, and has no intention of reducing its stake for now, the phone operator said.

Lifting the restriction means etisalat may be considered for inclusion in MSCI’s emerging-markets index, EFG-Hermes Holding said in an e-mailed note to clients on Tuesday.

The company could account for 0.14 per cent of the gauge and see about $360 million in passive inflows from inclusion, according to the Cairo-based investment bank.

Speaking to Khaleej Times, Hisham Amer, chief executive officer of Delma Brokers in Abu Dhabi, was confident that etsialat’s share prospectus to join MSCI are very bright. This is one reason investors are buying into the shares.

In a tightly-held shareholding, Amer said small shareholders sold their shares for profit-taking, in the last two trading sessions. The big shareholders would never sell them for obvious reasons, he said.

The EIA has already ruled out reducing its stake in the telecom.

The CEO of Delma Share Brokers was of the opinion that in order to bring more shares available on to the market, etisalat must increase its paid up capital by issuing right shares.

— haseeb@khaleejtimes.com