Dubai: Nasdaq Dubai futures contracts witnessed a slow and steady start, as cautious traders opted to wait before taking positions on a new product.
Back in 2008, the futures contracts were unsuccessful as it coincided with the global financial meltdown, but in 2016, traders have been pinning high hopes on UAE equities, which is already a part of the MSCI emerging market index, considering it as an option to safeguard themselves from unforseen sharp rises or falls.
On the first day of trade, shares worth Dh476,000 were traded, or 1,636 contracts — where 1 contract is equal to 100 shares — were traded. Aldar October futures was the most active contract in trade.
“It’s a slow start, but we think it would pick up momentum over time, We need to progressively move forward on getting new products like futures, options, derivatives for fund managers to be able to manage their portfolio,” Saleem Khokhar, head of equities at National Bank of Abu Dhabi’s asset management group told Gulf News.
Trade was started in seven futures contract, which included 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 bourses in the Middle East and international markets as well as options.
“Activity on the market looks set to increase steadily over coming months. More market participants will come on and the range of futures offered will expand in stages,” a Nasdaq Dubai spokesman said.
It is a matter of time before more investors would start trading in the product, industry watchers said.
“All along the day, we had more interested clients signing up and getting set up to trade. Many were waiting on the sideline to see how the first day will go, and it went tremendously well, which has attracted more investors to look at this new product being offered on the market,” Racha Alkhawaja, Head — Institutional Coverage at Menacorp, said over email.
Analysts said the launch provided a clear sign of market progression in the UAE and cements its position as an emerging market. However, traders were cautious at the same time.
“Clients are still cautious as this is a new product to our regional markets. We expect to see steady increase in volumes going forward as clients become more aware,” Samer Abuzahra, General Manager — Institutional Brokerage, Mubasher Financial Services said.
Getting started
To trade on Nasdaq Dubai, an investor will have to contact the broker and fill up a form to gain access and start trading on futures contracts on paying 30 per cent as margin. Now the question arises how to trade in the futures contracts.
Previously in a falling market, investors were hesitant to sell their buy positions for a loss, and rather preferred to hold as there was no tool to hedge their positions.
Now, with the latest introduction of futures contracts from Nasdaq Dubai, investors will be able to protect their long or buy positions by taking short or sell positions, and book profits in futures market.
