GCC Capital Markets Watch - Q2 2021

2021 started promisingly with 5 IPOs across the region after a difficult 2020 which had been hit hard by the impact of the global health crisis. This quarter saw no IPOs but there were still some notable equity transactions.

Nasdaq Dubai welcomed the secondary listing of The Bitcoin Fund in June, which was primarily listed on the Toronto Stock Exchange in January this year. The fund offers investors an indirect exposure to Bitcoins, potentially reflecting the region’s interest in alternative investments. This dual listed fund is the first indexed cryptocurrency digital asset-based fund in the Middle East and North Africa.

Alpha Dhabi Holding PJSC publicly listed on the Abu Dhabi stock exchange by way of a direct listing in June 2021. The total paid in capital of the company was approximately USD 2.7 billion. The listing led Alpha Dhabi’s parent company, International Holding Company (IHC), to become the largest company by market capitalization on the Abu Dhabi stock exchange. By the close of its first day of trading, the addition of Alpha Dhabi brought the market capitalization of all the shares listed on the ADX to over AED 1 trillion for the first time.

Notwithstanding the reduced IPO activity this quarter, there remains a market consensus that there will be further IPOs across the region this year as we move into a post global health crisis economy. This potentially is further assisted by the Kingdom of Bahrain’s adoption of the Global Industry Classification Standard from 11 July 2021 to improve effectiveness and transparency in its capital markets, the 2020 amendment to UAE company law, the recent launch of the Nasdaq Dubai Growth Market designed to provide access to the capital markets for small and medium enterprises (SMEs) and a number of governments in the region looking to privatise government assets.

Although Tadawul has been unusually inactive in Q2 2021, its IPO pipeline for the rest of the year looks promising. Saudi Telecom Company has been given approval at the end of June to list 24 million shares of its subsidiary Arabian Internet and Communications Services Company. Another anticipated IPO is that of Arabian Contracting Services Co. The company has received approval to offer 15 million shares, amounting to 30% of its share capital.

The region’s debt market was the highlight this quarter with multiple high value issuances led by the UAE markets, even though the UAE government did not issue any debt instruments this quarter, in contrast to previous quarters.

Mamoura Diversified Global Holding (MDGH) PJSC listed bonds with a total value of USD 2.8 billion on the Abu Dhabi stock exchange. This listing makes MDGH the biggest corporate issuer this quarter across the entire region.

Nasdaq Dubai is the region’s most prominent exchange for sustainability and ESG issuances, playing host to multiple green sukuks issuances this quarter by the Indonesian government which raised USD 3 billion. Both DFM and Nasdaq Dubai have issued sustainable issuance guides with the aim of encouraging ESG and sustainable investments in the UAE and across the wider region.

Several other governments in the region also issued debt to enhance their liquidity positions. The Kingdom of Saudi Arabia issued a USD 1.2 billion sukuk; the Kingdom of Bahrain issued two bonds with a combined value of USD 921 million; and the Sultanate of Oman issued a bond raising USD 789 million.

GCC equity markets performance by cumulative total return since 1 January 2020

Source: Eikon (Thomson Reuter), PwC Analysis

Share price performance of 2019, 2020 and 2021 GCC IPOs* by sector, relative to the respective all share index, from the IPO date to 30 June 2021

Source: Eikon (Thomson Reuter), PwC Analysis

^{The percentage figures shown in the chart above are the average share price movements of the newly listed companies under each sector relative to the index performance of the respective exchange.}

^{*  The IPOs of Al Moammar Information System Company and Sprinkle Holding BSC have been excluded due to insufficient data.
** The increase is mainly contributed by an increase of 1170% in the share price of Boursa Kuwait Securities Company (K.P.S.C.). If Boursa Kuwait Securities Company (K.P.S.C.) is excluded, the increase would be 5%.}