UAE Plans Reclassification Of Listed Stocks

by Lorys Charalambous, for LawAndTax-News.com, Cyprus

28 July 2004

According to reports in the regional media, listed stocks in the United Arab Emirates are likely to be classified in a more flexible way in the near future, in order to bring the country further into line with international listing practices.

Although the official bourses have not yet confirmed that they will be increasing the number of sectors UAE stocks are listed under, Gulf News revealed this week that many of the market players are planning to act pre-emptively in this area.

Currently, UAE stocks fall into one of five broad sectors, namely banking, services, insurance, hotels, and industrial.

However, speaking to the regional news service, a stock analyst at the National Bank of Abu Dhabi (NBAD) explained that:

"The present classification does not provide an accurate picture to investors as to what is going on in each sector in terms of major financial data and indicators. Most reports, daily or weekly or monthly, provide analysis of stock performance sector-wise. The excellent performance of one company such as Etisalat can drive that sector's figures or performance up even if some other companies are doing badly."

Consequently, the NBAD's Capital Markets Group plans to increase its classification categories for stocks from five to thirteen in the near future. These will include: banking, insurance, telecoms, services, tourism and hotels, aviation and leasing, agriculture/fishing/poultry, building materials, investment and financing, heavy industrial and commercial sectors.

According to Gulf News, the Abu Dhabi Securities Market has also announced that plans for broader stock classification are on the cards, but that implementation of the scheme will only take place when more firms are listed.

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