Foreign investors reap profits from their first UAE fund
United Arab Emirates, Business, 10/14/1997

Foreign investors in the United Arab Emirates (UAE) have started to reap profits from the first investment fund to permit them to own shares in this country, the fund said yesterday. Just four months after launched, the Emirates Equity Fund (EEF) said its investment in the UAE and other Gulf countries had so far yielded earnings of around 13 percent of share value.

"By the end of the year, the fund is expected to achieve a return of around 45 percent," said Shehab Qarquash, director of investment services at the Emirates Bank International, which created EEF in late May. "The fund's investments have reached nearly 300 million dirhams ($81.7 million), which have accumulated net profits of around 25 million dirhams," he told reporters.

Qarqash said around 90 percent of the investments were in stocks and the rest in bank deposits. Nearly 10 percent of the stocks are invested in neighboring Saudi Arabia and Oman he added.

Foreigners seeking investment in the lucrative Gulf markets rushed for subscription in EEF in the second half of May. The large demand led the UAE to increase the percentage of a fund that foreign investors could own from 20 percent to 49 percent.

The EEF represented the first opportunity for the UAE's dominant expatriate community to own shares in the Gulf nation.

Dealers said the move, which will likely be followed by other banks, would ease a steady capital flight from the country. Most foreign transfer out nearly two thirds of their income because of investment opportunities in the Emirates.

"When other funds are set up and UAE authorities allow foreign investors to own shares in banks and companies in the stock market, I think there will be a sharp decline in expatriate remittances abroad," a UAE stock broker said.

UAE officials have spoken of plans to give foreign investors limited access to the bourse when it opens with in the next few months.

Excluding the new fund, expatriates are still barred from the stock market despite local calls to open the market for them to attract their savings and increase the turnover of shares, currently among the lowest in the region.

Bahrain partially opened its stock exchanges to foreigners while Qatar has said it will follow suit.

Kuwait and Saudi Arabia have set up investment portfolios for expatriates. Qarqash said EEF made good profits because of a surge in share prices over the past few months caused by the strong performance of banks and companies.

According to UAE stockbroker Zuhair Kasmani, banks trading their shares in the local market are projected to boost their net profits by around 25 percent in 1997 over previous year. He said such expectations had led to record increases in the prices of most shares and boosted the index to its highest level ever.

"The sharp growth in the banks' profits is due to development of their services and an upswing in the domestic economy," he added.

The index, set up by the government-controlled national bank Abu Dhabi, hit an all-time high of 3,174.16 yesterday: up by 25 percent in just one month and more than 50 percent since the start of the year. About 40 national banks and companies trade their shares in the UAE, which has the second biggest Arab stock market after Saudi Arabia in terms of capitalization.

Previous Stories:
  New crackdown on alcohol in UAE   (10/10/1997)
  France requests use of UAE satellite channel   (10/9/1997)
  Weddings won't cost $70,000 anymore   (9/30/1997)

Please add a link on your webiste pointing to ArabicNews.com and bookmark ArabicNews.com & subscribe to our daily email news bulletin.

Search