Dubai: Industry watchers expect a slow and a steady pickup in volumes as Nasdaq Dubai relaunches futures contract from September 1, as they gain popularity over a short to medium term.
In an important milestone after the UAE’s stock market upgrade to the MSCI emerging market index, Nasdaq Dubai will be starting trade in futures contracts from Thursday in as many as seven Dubai listed stocks, but bourses may have to wait a little longer until traders and investors take optimal advantage of the new products to fight volatility and hedge themselves against adverse market movements.
“The popularity of the futures market will gain ground over months and years, as a broadening range of market participants invest in the products on offer and Nasdaq Dubai widens the range of futures products in subsequent phases,” Sanyalaksna Manibhandu, Director — Head of Research at National Bank of Abu Dhabi Securities told Gulf News on email.
To start with, the bourse will offer futures contracts in Dubai Parks and Resorts, Aldar Properties, Emaar Properties, etisalat, DP World, Arabtec and Dubai Islamic Bank. “In due course,” the bourse plans to expand to include other derivatives products, including futures on shares listed on Mena and international markets as well as options.
“We do not expect high volumes on the first day of trading. This is a new product and educating investors is a lengthy process. We expect investors to come in slowly into this product and watch the market in the first week to understand the process from a practical point of view,” Racha Al Khawaja, Head of Institutional Coverage, Menacorp told Gulf News.
Nasdaq Dubai has been conducting training sessions to brokers even conducted mock games as they ready for launch. They have nominated 36 members along with custodians and settlement banks for smooth functioning of the contracts.
Ready
One of the members — Menacorp — said they were ready from IT, risk and compliance perspective and have their clients already signing up for trading.
“This is a product what we have long waited for and believe will change the investment and trading landscape in the UAE market,” said Al Khawaja.
But analysts expect more traction to happen after the Eid break.
“We expect to see higher volumes and for volumes to increase exponentially after Eid holidays and year end,” Al Khawaja added.
Generally, UAE indices along with its other Gulf peers have been witnessing lacklustre volumes due to summer holidays, when volumes have tumbled by a half.
List of stock futures to be available
Aldar Properties
Arabtec Holding
DP World Ltd
Dubai Islamic Bank
Dubai Parks and Resorts
Emaar Properties
Emirates Telecommunications Group
