Etisalat shares rallied on Sunday after the company announced that foreign investors would be able to buy the stock from September 15.
The Abu-Dhabi-listed telecoms operator’s shares closed up 4.3 per cent at Dh13.25 following a statement to the stock market that its board of directors had approved the new rules that will regulate foreign ownership.
The statement added that trading in the shares would be open to “foreign individuals, foreign corporate entities, UAE free-zone entities and UAE incorporated entities”.
Nishit Lakhotia, the head of research at Bahrain-based Sico, said: “In the short term the stock is rallying on UAE retail investors buying the stock ahead of it opening up. Active foreign investors will come on and after September 15 and may also play on the MSCI inclusion story.”
The next semi-annual review of the MSCI Emerging Markets Index is due in November.
Etisalat’s inclusion in the MSCI would result in it representing 0.14 per cent of the index, according to the Cairo-based investment bank EFG-Hermes.
“Passive investors will get into the stock once it gets included in the MSCI index,” said Mr Lakhotia. “That may lead to another flow and momentum into the name.”
Etisalat said in June that it would allow foreign investors and institutions to own as much as 20 per cent of its shares.
However, foreign investors will not receive voting rights in Etisalat, as the UAE Government seeks to retain firm control of the company once restrictions on non-Emirati ownership are lifted.
Etisalat said last month that the UAE Government, with its 60 per cent shareholding in the company, would be designated as a “special share”, which would give it rights to key decisions such as approving any merger with another company, allowing the participation of a strategic investor or approving ownership of more than 5 per cent of the company’s stock by another entity or person.
Yet analysts said that there would be a strong appetite for Etisalat’s shares from foreign investors.
“Etisalat is the largest listed company in UAE and is one of the largest names in the region. Accordingly, it has its appeal from both regional and international investors looking at steady yield and strong fundamentals,” said Mr Lakhotia.
Etisalat operates in 19 countries across the Middle East and Africa — including Morocco, Egypt, Saudi Arabia and Nigeria — and Asia.
In July, Etisalat’s second quarter net profit after royalty, or tax paid to the government, fell to Dh1.5bn as foreign-exchange losses and troubles from subsidiaries hit earnings. The net profit was down 40 per cent from Dh2.5bn a year earlier.
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