Bond market correction, stock market training and UAE market inflows

Bond market correction, stock market training and UAE market inflows
07 June 2013

Bond and Sukuk markets stalling

Recent months have seen several high-profile bond and sukuk listings in the UAE market which were vastly oversubscribed as investors sought slightly higher yields than those issued by western governments. But recent indications are that we may be starting to see a correction in the UAE. All those bonds that have recently been issued and had exuberant, and indeed some speculator, take up are starting to dry up and become higher risk as robust data comes out from the US and other developed markets. As Reuter’s reports: ‘Earlier this week, Dubai shopping mall developer Majid Al Futtaim (MAF) Holding said it was delaying plans to raise at least $500 million from a hybrid bond sale - potentially the first such deal by a non-bank private company from the region - citing weak market conditions.’

Training in stock markets

Abu Dhabi Securities Exchange (ADX) signed a Memorandum of Understanding with Abu Dhabi University (ADU) to train students in the workings of the stock market. As part of the agreement, ADX will conduct seminars and workshops for ADU students aiming at explaining market procedures and the methods of trading in the domestic market. ADX will also provide a summer research grant for ADU faculty to work on applied research projects as well as providing a virtual trading platform (Stock Game) for the ADU students. More

The UAE bourses attracted the most direct foreign investment in ‘Frontier markets’

The UAE is one of a unique group of countries classified as frontier markets in the investment world. As global investors seek larger returns on their investments they have been increasingly turning their money towards frontier markets with the UAE receiving the largest share according to the Financial Times and Citibank reports.

Citi estimates assets under management from foreign funds in all 32 frontier markets has now reached US$ 17bn, up from US$ 12bn in the middle of last year. This is a relatively small amount in comparison to assets under management in emerging markets. Because they are so thinly traded, it does not take a lot of fund flows to propel the market upwards. And that can work in reverse. Those big gains that we have seen on the local bourses can quickly become big losses if investors decide to pull out.

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Author
Head of Behavioral Finance
cashy
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