Despite calling off its IPO, Axiom said it will continue to expand in the UAE and Saudi Arabia, its two main markets.
Despite calling off its IPO, Axiom said it will continue to expand in the UAE and Saudi Arabia, its two main markets.
Despite calling off its IPO, Axiom said it will continue to expand in the UAE and Saudi Arabia, its two main markets.
Despite calling off its IPO, Axiom said it will continue to expand in the UAE and Saudi Arabia, its two main markets.

IPOs suffer as market volumes in UAE plunge


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The volume of shares traded has fallen by more than half in each of the UAE's three bourses in the past year, a critical lack of liquidity that claimed its latest victim in Axiom Telecom's cancelled share sale.

According to research by The National, the average daily volume of trade on the Dubai Financial Market (DFM) is down 65 per cent in the year to date compared with the same period last year. The Abu Dhabi Securities Exchange and the FTSE NASDAQ Dubai UAE 20 Index are each off 52 per cent.

The declines are even more pronounced compared with the markets' boom years of 2005 and 2006.

Analysts say Axiom's surprise decision to abandon its initial public offering (IPO) is symptomatic of larger problems on local bourses, which have in large part failed to lure investors back after the onset of the financial crisis.

"The liquidity is an issue," said Chet Riley, an analyst at Nomura. "It is a difficult time at the moment to introduce international investors."

The tepid interest in UAE stocks comes as billions of dollars is flowing into emerging markets around the world in response to US monetary policy and troubles within the euro zone. The UAE equity markets have yet to see a similar benefit.

The cancellation of Dubai's first IPO in two years comes a week after Dubai officials said they were considering servicing the emirate's debt burden through future share sales.

Axiom Telecom's IPO on NASDAQ Dubai, which the company had hoped would raise as much as US$382 million (Dh1.39 billion), was cancelled at the last minute on Monday after it struggled to attract buyers.

As late as Monday afternoon, bankers were calling potential investors as the deadline approached.

"The bankers were pushing clients they had strong relationships with to subscribe. The valuations were way too rich. In a better market maybe they might have done better," said Hassan el Salah, the head of institutional trading at AlRamz Securities in Abu Dhabi.

The book was eventually fully subscribed at $0.80, the lower end of the proposed range of between $0.80 and $1.15.

More than three quarters of subscriptions came from investors outside of the Gulf region, mainly the US and Europe, but the company conceded that demand fell short of expectations. One source close to the offering said fewer than 100 investors subscribed. The company and its bankers grew concerned that demand for the shares - and as a result their price - would also not be strong in open trading.

"The reason we pulled out was a combination of deteriorating market conditions … and our desire that the shares trade well in the after markets," said Dr Christopher Laing, the managing director and head of MENA sales for Deutsche Bank.

Axiom had planned to list up to 35 per cent of its shares. The retailer is 40 per cent owned by Dubai Holding, the remainder owned by two local family groups.

The firm chose to list on NASDAQ Dubai to maintain control of the company, as the bourse requires companies to float only 25 per cent of shares. But only brokerages that are members of the exchange are permitted to trade NASDAQ Dubai stocks, which could have limited the volume of trading after the listing, Mr el Salah said.

By comparison, the DFM, which is generally more liquid, requires companies to sell 55 per cent of shares to go public.

Some analysts say the differing regulations among the bourses is a liability for local stocks because it is confusing to outside fund managers and other foreign investors.

Another factor in Axiom's decision was that retail investors were not permitted to subscribe to the offering, which is a common practice in many western markets but problematic in the UAE where retail traders account for as much as 80 per cent of volumes.

"Local IPOs without local retail investors are doomed," said Mohammed Ali Yasin, the chief investment officer at CAPM Investments.

*This article has been corrected from the original to specify that the reference to NASDAQ Dubai data referred to the FTSE NASDAQ Dubai UAE 20 Index. The National apologises for the error.

* with additional reporting by Armina Ligaya and Farah Halime

aligaya@thenational.ae

Sole survivors
  • Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
  • George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
  • Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
  • Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
Labour dispute

The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.


- Abdullah Ishnaneh, Partner, BSA Law 

Dubai Bling season three

Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed 

Rating: 1/5

SHAITTAN
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DAY%20ONE%20RESULT
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Key facilities
  • Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
  • Premier League-standard football pitch
  • 400m Olympic running track
  • NBA-spec basketball court with auditorium
  • 600-seat auditorium
  • Spaces for historical and cultural exploration
  • An elevated football field that doubles as a helipad
  • Specialist robotics and science laboratories
  • AR and VR-enabled learning centres
  • Disruption Lab and Research Centre for developing entrepreneurial skills
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Company profile

Name: The Concept

Founders: Yadhushan Mahendran, Maria Sobh and Muhammad Rijal

Based: Abu Dhabi

Founded: 2017

Number of employees: 7

Sector: Aviation and space industry

Funding: $250,000

Future plans: Looking to raise $1 million investment to boost expansion and develop new products

TOUCH RULES

Touch is derived from rugby league. Teams consist of up to 14 players with a maximum of six on the field at any time.

Teams can make as many substitutions as they want during the 40 minute matches.

Similar to rugby league, the attacking team has six attempts - or touches - before possession changes over.

A touch is any contact between the player with the ball and a defender, and must be with minimum force.

After a touch the player performs a “roll-ball” - similar to the play-the-ball in league - stepping over or rolling the ball between the feet.

At the roll-ball, the defenders have to retreat a minimum of five metres.

A touchdown is scored when an attacking player places the ball on or over the score-line.

THE CARD

2pm: Maiden Dh 60,000 (Dirt) 1,400m

2.30pm: Handicap Dh 76,000 (D) 1,400m

3pm: Handicap Dh 64,000 (D) 1,200m

3.30pm: Shadwell Farm Conditions Dh 100,000 (D) 1,000m

4pm: Maiden Dh 60,000 (D) 1,000m

4.30pm: Handicap 64,000 (D) 1,950m

PROFILE OF HALAN

Started: November 2017

Founders: Mounir Nakhla, Ahmed Mohsen and Mohamed Aboulnaga

Based: Cairo, Egypt

Sector: transport and logistics

Size: 150 employees

Investment: approximately $8 million

Investors include: Singapore’s Battery Road Digital Holdings, Egypt’s Algebra Ventures, Uber co-founder and former CTO Oscar Salazar

LILO & STITCH

Starring: Sydney Elizebeth Agudong, Maia Kealoha, Chris Sanders

Director: Dean Fleischer Camp

Rating: 4.5/5

How to get exposure to gold

Although you can buy gold easily on the Dubai markets, the problem with buying physical bars, coins or jewellery is that you then have storage, security and insurance issues.

A far easier option is to invest in a low-cost exchange traded fund (ETF) that invests in the precious metal instead, for example, ETFS Physical Gold (PHAU) and iShares Physical Gold (SGLN) both track physical gold. The VanEck Vectors Gold Miners ETF invests directly in mining companies.

Alternatively, BlackRock Gold & General seeks to achieve long-term capital growth primarily through an actively managed portfolio of gold mining, commodity and precious-metal related shares. Its largest portfolio holdings include gold miners Newcrest Mining, Barrick Gold Corp, Agnico Eagle Mines and the NewMont Goldcorp.

Brave investors could take on the added risk of buying individual gold mining stocks, many of which have performed wonderfully well lately.

London-listed Centamin is up more than 70 per cent in just three months, although in a sign of its volatility, it is down 5 per cent on two years ago. Trans-Siberian Gold, listed on London's alternative investment market (AIM) for small stocks, has seen its share price almost quadruple from 34p to 124p over the same period, but do not assume this kind of runaway growth can continue for long

However, buying individual equities like these is highly risky, as their share prices can crash just as quickly, which isn't what what you want from a supposedly safe haven.

Profile

Company: Libra Project

Based: Masdar City, ADGM, London and Delaware

Launch year: 2017

Size: A team of 12 with six employed full-time

Sector: Renewable energy

Funding: $500,000 in Series A funding from family and friends in 2018. A Series B round looking to raise $1.5m is now live.

UAE currency: the story behind the money in your pockets
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Everything Now

Arcade Fire

(Columbia Records)

US tops drug cost charts

The study of 13 essential drugs showed costs in the United States were about 300 per cent higher than the global average, followed by Germany at 126 per cent and 122 per cent in the UAE.

Thailand, Kenya and Malaysia were rated as nations with the lowest costs, about 90 per cent cheaper.

In the case of insulin, diabetic patients in the US paid five and a half times the global average, while in the UAE the costs are about 50 per cent higher than the median price of branded and generic drugs.

Some of the costliest drugs worldwide include Lipitor for high cholesterol. 

The study’s price index placed the US at an exorbitant 2,170 per cent higher for Lipitor than the average global price and the UAE at the eighth spot globally with costs 252 per cent higher.

High blood pressure medication Zestril was also more than 2,680 per cent higher in the US and the UAE price was 187 per cent higher than the global price.

MISSION: IMPOSSIBLE – FINAL RECKONING

Director: Christopher McQuarrie

Starring: Tom Cruise, Hayley Atwell, Simon Pegg

Rating: 4/5