Dubai: Nasdaq Dubai has reached an exciting stage of its development as the international stock exchange serving the Middle East.
Reported trading volumes have risen sharply this year, both in equities and equity derivatives, amid encouraging signs of recovery in the region's capital markets.
The exchange looks forward to further expansion in 2010, including more listings. Its growth potential is underpinned by the straightforward access that if offers to individual and institutional investors in its own region as well as to institutional investors in New York, London and around the world.
These links to investors have been strengthened in recent weeks by the arrival of three more brokers as members of Nasdaq Dubai's market — Al Awael Securities, based in Abu Dhabi; Emirates International Securities, based in Dubai and owned by Emirates NBD, which is the Middle East's largest bank by assets; and Goldman Sachs, the international investment bank. All of them link the exchange to a diversified investor base in a period of renewed interest in UAE stocks.
Revival
The revival of share prices this year is best illustrated by the exceptionally strong performance of the FTSE Nasdaq Dubai UAE 20 share index, which includes leading companies from all three of the country's stock markets, such as DP World on Nasdaq Dubai, Emaar on the Dubai Financial Market (DFM) and Abu Dhabi Commercial Bank on the Abu Dhabi Securities Exchange (ADX).
The index's rise of 76 per cent this year to end-October was much larger than that of the DFM and ADX main indices, at 34 per cent and 26 per cent respectively.
The difference is explained by the way in which companies are selected for the UAE 20 index; it includes only the UAE's largest and most heavily traded companies, and only those that are open to foreign investors.
Small and infrequently traded stocks, which impact the DFM and ADX indices, are excluded. So for most regional and international investors, the UAE 20 index provides the most relevant gauge of UAE stock movements.
This is also true when prices are falling. Last year, the UAE 20 index registered sharper declines than the other indices.
One of Nasdaq Dubai's most significant achievements was the creation a year ago of futures contracts on the UAE 20 index, as well as on 20 individual UAE shares from all three stock markets.
The futures have been designed as tools for both hedging and investment and the UAE 20 index correlates well with markets across the Middle East. Equity derivatives trading volumes have grown rapidly this year, reaching a record of 21,330 in October, compared with just 90 traded in January.
This increase has occurred alongside rising reported equities volumes, which reached 2.32 billion shares in the first nine months of 2009, up 48 per cent from 1.57 billion in the same period of 2008.
Confidence
As confidence in the business environment has started to return, companies in the UAE and across the region are showing increasing enthusiasm for going public in 2010.
Nasdaq Dubai also looks forward to expanding its sukuk market, which is the largest of any exchange in the world with a nominal value of $16.7 billion (Dh61.34 billion).
Building on its growing suite of listed products, its diverse investor base and the excellence of its regulatory procedures, Nasdaq Dubai looks forward to a continuing fruitful partnership with investors and issuers in 2010.
The writer is the Chief Executive of Nasdaq Dubai
