The first IPO scheduled in Dubai since the financial crisis two years ago was cancelled on Monday due to worries about ‘market conditions and liquidity’, in other words investors might have lost money.
A statement from Axiom said: ‘While there were sufficient orders to fully cover the IPO book at the price range, primarily due to demand from high quality international investors in Europe and the US, there were widespread concerns about market conditions and liquidity’.
This is probably the right decision. With storm clouds brewing in European financial markets and concern over a bubble forming in China, the immediate outlook for the Nasdaq Dubai bourse is most likely a correction from its post-Ramadan rally.
That would have left the new shareholders will a loss and have endangered future Dubai IPOs. But the cancellation of a $1billion IPO is hardly a bullish signal in any financial market.
It is not as though the fault is down to Axiom which presented a credible business model for selling mobile handsets, and was planning to pay down $354 in debt with the proceeds. The fault is with a lack confidence about the future direction of local stocks.
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