Daman Investments has identified seven key factors that will help revive local stocks in the coming period.

The market is attracting about AED 12.89 billion if foreigners are allowed to own 100% of the shares of eight companies listed on the financial market.

Key factors

According to the company, the seven factors are divided between four factors that have already been achieved, and three factors that the achievement of which will stimulate economic growth. The factors that have already been achieved are continued high oil prices, government spending and economic initiatives, falling interest rates as the dollar rises, UAE banks merge and profitability improves.

The factors required to achieve the 100% foreign ownership of listed companies, increase the efficiency of the Securities and Commodities Authority, improve the level of liquidity and the depth of the market.

Oil prices

The report pointed out that oil prices have risen by 18% since the beginning of 2019, and the average price of a barrel this year to $ 66, which is close to the price equivalent to oil in the budget of the Emirates of $ 65 a barrel.

He pointed out that this will lead to reducing the budget deficit, to reach 0.8% of GDP, compared with 1.8% during 2018.

Government spending

In terms of government spending, Abu Dhabi announced a $ 50 billion economic stimulus package for the period from 2019 to 2021, the report said. The package includes 50 initiatives focusing on business, investment, community, innovation, knowledge and lifestyle.

Other policies that will contribute to market attractiveness are the agreement with Abu Dhabi First Bank to guarantee about 75% of bank loans for small and medium-sized enterprises, and to give contractors and suppliers working in government projects their dues within 30 days at a time when Abu Dhabi National Oil Company (ADNOC) ) To increase production capacity, with plans to spend AED 486 billion during the period from 2019 to 2023, helping to stimulate private sector growth and provide more jobs.

Government initiatives

According to the report, a key factor in promoting growth is government initiatives, such as allowing foreigners to own 100% of economic projects in 122 sectors, facilities for attracting tourists, granting accommodation facilities to investors and distinguished individuals, and reducing fees. He said that increasing the percentage of foreign ownership in the stock market will contribute to attracting foreign investments to the market, as well as contribute to the rise in shares and reach their fair value, as they are currently trading below their real value.

Foreign ownership

The report revealed that the size of the expected financial flows, if the ownership of the shares of eight companies in the financial market is allowed to reach 12.893 billion dirhams, the report says that the shares of «Etisalat» could attract 3.78 billion dirhams, if allowing foreigners to own 100% of its shares, Emirates NBD's shares are expected to attract AED 2.925 billion, Dubai Islamic Bank 1.773 billion, Abu Dhabi First Bank AED 1.453 billion, Emaar Properties AED 1.024 billion, Abu Dhabi Islamic Bank AED 936 million, Emirates Integrated Telecommunications Company (AED 708 million) and Aldar Properties (AED 294 million).

Corporate governance

The report called on the Securities and Commodities Authority (ESCA) to develop a strong framework for corporate governance to protect shareholders' rights, especially the minority, and to place greater restrictions on insider trading.

He stressed the need to improve the depth of the market, by trying to include family businesses and expatriates who have strong companies, which contributes to improving the diversity of the market, by including new companies in sectors such as education, health, oil and gas services and manufacturing.

Banking integration

The report said that the integration into the banking sector will benefit the economy, small banks and customers. Abu Dhabi First Bank accounts for 22.2% of the total loans, followed by Emirates NBD with 20.4%, Abu Dhabi Commercial Bank with 17% Dubai Islamic Bank (8.6%), while the rest of the state banks hold the remaining 31.8%.

«Expo 2020 Dubai»

The Expo 2020 Dubai is a catalyst for the economy. The economy will grow by about AED 122 billion by 2031, equivalent to 1.5% of the nominal GDP of Dubai from 2013 to 2031.