Dubai fourth amid future financial hubs

Dubai: Amid rapid globalisation of the financial markets industry, Dubai ranks fourth in a survey of executives around the world who were asked to predict possible leading financial centres in the future.

Asked which financial centres are likely to be at least as dominant as New York, London and Tokyo by 2025, Shanghai was number one followed by Mumbai, Hong Kong and Dubai, said Suzanne L Duncan, industry leader, financial markets, IBM Institute for Business Value, and one of the authors of a white paper issued by the institute on global financial markets.

"Now what is remarkable about that is if you compare the history of market centres over the course of time, these others have been around for decades, if not over the past century. But if you look at Dubai, I would say, it has come up in the past two years and it is already on the radar of executives.

"And what we expect to happen is that if we were to bring that year down from 2025 to 2015, they would have answered the exact same way."

The survey also reveals that privatisation is inevitable in the region and it is going to happen quickly.

"As that starts to happen, then that would increase the amount of liquidity within the market and we expect Dubai to come up with significant amounts of liquidity sooner rather than later," said Duncan.

Although Dubai has seen the greatest growth in liquidity in Europe, the Middle East and Africa - a double digit compound annual growth rate, almost 20 per cent, in the past few years - its share is not the biggest. London is still the leader. "But over the next five years we expect it to begin contributing significant amounts of size as well," Duncan added.

Issues

However, there are issues - "sources of friction", as Duncan termed them - that could inhibit participation of Dubai and the region.

"The number one and number two sources are socio-politics and the regulatory environment. But looking at the governments' and regulators' specific plans and their expectations going forward, what we expect to happen is they will encourage the opening up of markets, more than what they have in the past even though it will come with fits and starts."