Business | Markets
'Faster privatisation needed' to revive weak stock markets
The UAE government should accelerate privatisation of state-owned companies to boost falling local stock markets and give investors greater options, a Dubai regulator said on Wednesday.
- By Arif Sharif, Staff Reporter
- Published: 00:00 September 14, 2006
- Image Credit: Regi Varghese/Gulf News
- Habib Al Mulla says the region’s regulators must improve information flows although it is much easier to improve legislation and regulation when the markets are rising than when they are depressed.
Dubai: The UAE government should accelerate privatisation of state-owned companies to boost falling local stock markets and give investors greater options, a Dubai regulator said on Wednesday.
Habib Al Mulla, chairman of the Dubai Financial Services Authority that oversees Dubai's financial free zone, told reporters a part of the problem with local stock markets was that there were not enough listed companies.
"So what we need is that the government should accelerate its privatisation process. The Dubai government has taken a very major step by announcing they will privatise DFM (the Dubai Financial Market)," Al Mulla said at a DFSA luncheon meet.
UAE share markets have slid some 30 per cent this year as part of a region-wide correction.
The Dubai and Abu Dhabi stock markets together list more than 90 companies but only about 60 of them are actively traded. Trading is also concentrated in a few stocks, with the top 15 companies making up nearly 90 per cent of share sales by value.
In December, the Dubai government announced it will offer 20 per cent of DFM's shares to the public, possibly in the next few months, but many large state-owned companies like Emirates airline, DP World and Dubai Aluminium and some in Abu Dhabi are still unlisted.
Al Mulla said Middle East capital markets have legal and regulatory deficiencies and transparency is poor, in part because of the companies themselves.
The region's regulators needed to improve information flows although it is much easier to improve legislation and regulation when the markets are rising than when they are depressed.
Al Mulla said the legal framework governing Dubai's financial free zone, the Dubai International Financial Centre, was complete and the trust law was the last major legislation to come out of the DFSA.
He said any future amendments will only be improvements to existing laws unless there is a specific need for any particular business.
"For example, at one point in time we did not think we needed a trust law and that we could rely on the law of the domicile of the trust, like Jersey, UK or Singapore," Al Mulla said.
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