Foreign investors are coming back to trade on UAE bourses, according to a brokerage report released yesterday, even if the numbers still lag behind those of most emerging markets.
Foreign buying of UAE shares grew sharply last month in a number of the country's top companies, including First Gulf Bank, Emaar Properties and Abu Dhabi Commercial Bank. The buying coincided with net selling by UAE nationals.
"While the UAE nationals were heavy sellers on both [Dubai Financial Market] and [Abu Dhabi Securities Exchange], other nationalities concluded March as net buyers," said Talal Toukan, the head of research at AlRamz Securities brokerage in Abu Dhabi. "They have started investing again as valuations become more attractive following the political developments in the region."
Despite the shift, foreign investors still own only a small portion of the UAE's publicly traded shares. UAE nationals hold 91.5 per cent of the country's shares.
In many emerging markets, foreign investors hold more than half of the available shares, Mr Toukan said.
While the UAE is not classified as an emerging market by the index provider MSCI, the company said in its review last year that it would like the country to relax its limits on foreign ownership of listed companies.
Foreign investors are still not eligible to buy shares in Etisalat, the UAE's largest telecommunications operator, and the limit on foreign ownership in Emirates NBD, Dubai's biggest lender, remains at 5 per cent.
Since many investors sold stock at the onset of the regional turmoil, there is now more leeway for foreign investors to buy into companies that have low ownership limits, but those limits will be tested again if the latest buying trend continues, Mr Toukan said.
Overall, foreign investors increased their holdings by 129 million shares last month, while UAE nationals reduced their holdings by 388 million shares in the month.