DIFX stands to gain from liquidity injection

Abu Dhabi: The Dubai International Financial Exchange (DIFX) will benefit from the government's decision to pump Dh70 billion into the banking system, according to a senior executive.

"It will help because markets operate through investors' sentiment, and this announcement reflects confidence in the region's markets," Jeffrey H. Singer, Chief Executive Officer of DIFX, told Gulf News.

The losses recorded by the DIFX during the past two weeks were in tandem with the international meltdown, rather than the local markets, and the early recovery of the region's markets will also encourage the flow of foreign funds to the UAE.

The market is planning to start trading on Sundays, soon to be followed by partial synchronisation of its trading hours with the local markets.

"We are also committing to our announcement in August to have a soft launching for the derivatives market in November as well," Singer promised.

Task

Increasing the liquidity and the flow of foreign funds is the task assigned to the newly appointed chief executive who attributes the relatively slow pace to the fact that CEOs and chief financial officers of the international companies are not allocating sufficient time and effort to familiarise themselves with the region.

"During the past two weeks, there were 250 million shares traded for DP World, our largest listing, which demonstrates the degree of liquidity at DIFX," he said, explaining that DIFX is dominated mostly by institutional investors, contrary to the local stock markets where retail is the norm.