Saudi leads Gulf IPO activity in H1 with REIT listings

Saudi Arabia led initial public offering (IPO) activity in the Gulf Cooperation Council (GCC) region during the first half of this year, driven by the listing of eight new REITs on the Saudi Stock Exchange (Tadawul), consultancy firm PwC said in a recent report.

Other than the eight listings in Saudi, the only other initial public offering (IPO) in the region was that of Arabian Falcon Insurance Company SAOG in Oman.

The Gulf region’s total proceeds from IPOs in H1 2018 stood at $893 million, compared to $610 million from 15 IPOs in the same period last year, the report said.

The increase in proceeds was mainly due to the two REIT IPOs: Sedco Capital REIT ($173 million) and Bonyan REIT ($174 million), both in Saudi Arabia.

Tadawul was also the best performing stock exchange in the region, with benchmark Tadawul All Share Index (TASI) recording a 12 percent improvement compared to H1 2017, the report said.

“The recent approval of Tadawul’s inclusion in the MSCI Emerging Markets index, which is to be completed in June 2019, is expected to attract foreign investment and provide a positive boost to the Tadwaul equity market,” PWC said.

The Abu Dhabi Securities Exchange (ADX) emerged as the second high performing index in GCC in H1 2018.

Meanwhile, investors continued to tread cautiously in the rest of the GCC equity markets in Q2 2018, closing the first half of 2018 on a muted note, according to the report.

“The future trajectory of GCC equity markets will continue to depend on geopolitical developments, stability of oil prices and the implementation of ongoing government reform policies and related privatization initiatives across the GCC region,” PwC said.

Saudi Arabia and Qatar led the region in terms of bond and sukuk issuances.

The GCC sovereign bond market witnessed proceeds of $22.9 billion during the second quarter of 2018. Corporate debt activity, however, was relatively slow.

“Given the recent recovery in oil prices and easing of government fiscal deficits, sovereign debt issuances are expected to taper in the latter half of 2018,” the report said.