Emaar Malls Group surges 20% on opening day on Dubai Financial Market

Emaar Properties hived off Emaar Malls Group, the retail unit of the Dubai developer, in an IPO that raised $1.6bn.

Emaar shares surged in early trading on the DFM. Pawan Singh / The National

Emaar Malls Group shares surged on their first day of trading as The Dubai Mall’s owner also reported rising earnings

Shares rose as much as 20 per cent to Dh3.50 on its debut on the Dubai Financial Market exchange yesterday, after raising US$1.6 billion in an initial public offering last month.

“It’s risen above our expectations. We were expecting Dh3.30, while the street was talking about Dh4 a share,” said Tariq Qaqish, the head of asset management at Al Mal Capital, a Dubai-based investment bank.

Emaar Properties hived off Emaar Malls Group (EMG), the retail unit of the Dubai developer, in an IPO that raised $1.6bn last month. The shares were offered at the higher end of the range at Dh2.90 each.

At the 2pm close, EMG had pared some of its gains, closing up 12 per cent to Dh3.25.

Still, some analysts said that even that price flattered the company.

“Emaar said its business was worth at best Dh2.90, so why would people hold stock above that price?” said Nabil Rantisi, the managing director of brokerage at Mena Corp.

“I don’t think we’ll see buying pressure on the stock until it’s near that level. It’s expensive.”

Emaar Malls Group separately released its second-quarter financials, which showed sales increased 13.6 per cent to Dh1.25bn from Dh1.1bn in the same period a year earlier. Net profit jumped 23.9 per cent to Dh617.17m, compared with about Dh498 million a year before.

Shares of Emaar Properties dropped 4.7 per cent to Dh11.15 amid a broader decline on the Dubai market.

Some of the cash raised from the IPO will be distributed to Emaar Properties shareholders as a dividend, the company said earlier this year.

The Dubai Financial Market General Index declined 1.6 per cent to 4,958.18 points. Nineteen stocks declined, nine stocks rose, and five were unchanged after the trading session.

The broader sell-off was attributed to a decline on international markets the day before.

The MSCI Emerging Markets Index was down 0.8 per cent yesterday to 996.86 points at 2pm UAE time.

“We’re not an island ... we do feel and react to what happens globally,” said Saleem Khokhar, the head of equities at National bank of Abu Dhabi. “When you see the wider emerging markets coming off ... its expected to see that translating into our region.” UAE stocks, including Emaar Properties, were incorporated into MSCI’s Emerging Markets Index in June after they were upgraded from the Frontier Markets Index.

“The institutional tranche is very influential – especially the international institutions,” Mr Qaqish said.

“So maybe they are looking to book some profit in this region. A 20 per cent increase on Emaar Malls Group is not bad.”

The UAE bourses, the Abu Dhabi Securities Exchange and Dubai Financial Market, will be closed on Sunday and Monday in observation of the Eid holiday, the market regulator said earlier this week.

Investors typically close their positions during the holiday breaks to avert possible risks from international markets while trading is suspended in local markets.

“Heading into the short vacation in the UAE and wider region, it’s expected to see people take some profits,” Mr Khokhar said.