|By Matein Khaalid|Emaar Properties will sell 20% of its UAE development portfolio in an initial public offering in November. This is the first IPO in the UAE capital markets in the last three years and follows bellwether offerings such as Emaar Malls and Emaar Misr. Emaar’s Dubai development’s adjusted net value is 24.1 UAE dirhams and I would not be surprised if the post IPO revalues the portfolio to 30 billion AED. The crucial issue for me, as always, is the pricing, valuation and secondary market trading prospects of the IPO. Of course, the rise in Emaar Property’s share price from AED 7 to as high as AED 8.9 after the development IPO was announced in June meant that the optimal strategy was to buy the parent’s shares on the news. However, given that oil prices have doubled since their lows the US dollar index has depreciated 8% in 2017, Emaar’s offplan sales have risen above 10% amid a stressed secondary market and a de facto bank credit crunch, the fabulous margins in Dubai property development and the potential in Expo 2020, Emaar Development will be a profitable deal for investors upon its listing.
Value in major emerging market currencies? Indian rupee, Thai baht, Mexico peso (NAFTA blowup risk overdone), South African rand (Ditto with Zuma/Gupta risk) and the Russian rouble, where central banks have sacrificed stronger currencies in the quest to build reserves. it is surreal to see Bitcoin’s implied volatility surge from only 20% this summer to 100% in October. The little leveraged lambs are being led to the slaughter us they happily climb aboard this lunatic roller coaster. Yalla, habibi!
Also published on Medium.