Welcome to our weekly GCC economy update, where we present some highlights in the regional economy that you may have missed out on last week.
IPOs
According to Mohamed Al Hadari, the listing of eleven companies on the country's bourses in 2023 will raise more than US$ 2.18 billion, and, in addition, four free-zone entities and two unique purpose acquisition companies (SPACS) are in the listing pipeline.
The deputy chief executive of the Securities and Commodities Authority also commented that the next two years will see "significant growth and development in the local markets and IPO markets." These listings are expected to boost the liquidity of local capital markets, attract more retail investors and improve trading efficiency. He also concluded that "it will make the UAE markets even more attractive to foreign investors, who are investing in the future of one of the best-performing economies in the world." The quicker-than-expected rebound from the pandemic, and the high energy prices, buoyed the local markets that last year witnessed twelve IPOs, raising US$ 11 billion.
Of the twelve IPOs, four state-owned entities – DEWA, Salik, Empower, and Tecom – raised US$ 8.3 billion, with DEWA "contributing US$ 6.1 billion of that total; in November, schools' operator Taaleem also listed its shares on the DFM, raising US$ 205 million.
The Dubai government also announced a US$ 545 million market maker fund to encourage the listing of more private companies from sectors such as energy, logistics, and retail.
Banking
Last year, the seven listed banks in the UAE reported a combined net profit of US$ 9.03 billion, with the highest being First Abu Dhabi Bank, posting a figure 7.0% higher at US$ 3.65 billion.
The leading two Dubai financial institutions were Emirates NBD and DIB – with profits 40.0% higher at US$ 3.54 billion and by 26% to US$ 1.50 billion. The former's gain was driven by robust regional economic growth and the success of its diversified business model, with its Q4 profit, at US$ 1.06 billion, up 94% year-on-year, attributable to improving margins and a lower cost of risk; total income came in 36.0% higher to US$ 9.95 billion, driven by increased transaction volumes and improved margins.
Tax
This week, the FTA announced that it will start early corporate tax registration for specific categories of companies and that they would receive invitations to register using the Emara Tax platform for digital services; this early registration phase will be in place until May, at which time, the tax authorities will open the process for other companies and businesses.
The FTA will provide more information about registration for corporate tax "in due course." Introduced a year ago, starting from 01 June 2023, the new federal tax will have a 9% rate on all registered companies, with a profit of over US$ 102k (AED 375k), i.e., taxable profits below that threshold will be subject to a zero rate. The tax will not apply to salaries or other personal income from employment.
Get back next week for more updates from the GCC financial markets, and don't forget to follow our LinkedIn page to stay up-to-date with the latest news from the financial industry.
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