DUBAI: Dubai Financial Market (DFM) is working to reduce the number of retail buyers and speculators in its market, the bourse’s business development chief told Dubai Chamber’s National Treasure conference on Wednesday.
“In the region the stock markets are really based on retail — like 70 per cent of the market is retail-driven,” said Fahima Al Bastaki, executive vice-president and head of business development division at DFM.
“A lot of them are just speculators. What we’re doing here is we are reducing that to have more sophisticated investors in the market. We educate people on how to select and make the right decisions,” he said.
Much of the education was not coming directly from DFM but from outside analysts and financial experts, she said.
She displayed figures showing the trading share of non-Arab foreign investors in DFM rose from 43.8 per cent in 2014 to 46.6 per cent in the first half of 2016, accounting for Dh1.4 billion of net investment so far this year.
Foreign ownership rose from 11.2 per cent of market capitalisation in 2011 to 22.7 per cent in the first half of 2016, which she said demonstrated continued confidence in the quality and diversity of investment opportunities.
While the real estate and construction sector contributes 22 per cent of Dubai’s GDP and financial services 12 per cent, these sectors dominate DFM’s market capitalisation, at 37 per cent and 45 per cent respectively.
Companies could continue to be attractive investments, and attract the right sort of investors and analysts by delivering on their promises, adding shareholder value and share price appreciation, she said. Any funds from IPOs should be invested in growth, and firms should have a long-term plan for managing post-IPO risks and ensuring regulatory compliance.
Additionally, listed firms should manage and execute strategic initiatives, ensure they are transparent and have a strong communication plan, manage risk across the organisation and re-evaluate their management teams.
