NO 250 – DECEMBER 2013

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WFE Focus
WFE INTERVIEWS DUBAI FINANCIAL MARKET
ESSA KAZIM
Chairman,
Dubai Financial Market (DFM)

FOCUS: Could you give us a bit of background about your exchange?

DFM: Within a short period of time, Dubai Financial Market (DFM) has fast developed into the leading financial market across the region. Its ongoing efforts and strategic initiatives have further reinforced Dubai’s position as a dynamic capital markets hub. DFM has always played a pivotal role in developing the financial markets sector in the region through enormous innovations and electronic services utilizing the most advanced technology.

DFM is the first exchange in the UAE and the first publicly listed exchange in the region. DFM launched its activities on 26 March 2000. On 27 December 2005, the Executive Council of Dubai decided to transform the exchange into a public company with a capital of US$ 2.178 billion, and 20% of the capital was offered through an IPO. Moreover, DFM became the first Shari’a compliant exchange globally since 2007 and this clearly reflects the renewed and ambitious vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice-President, Prime Minister and Ruler of Dubai to transform the emirate into the capital of Islamic economy.

DFM is operating as a secondary market for trading of securities issued by public joint-stock companies, bonds issued by the Federal Government or any of the Local Governments and public institutions in the country, units of investment funds and any other financial instruments, local or foreign, which are accepted by the Market. DFM provides its market participants with enormous value added services such as Annual General Meeting management services, IPO services, market data feeds, electronic reporting, iVESTOR cards (for cash dividend distribution) and operational support.

As of end of November 2013, the DFM market capitalization US$ 70.24 billion, while the general index was up 81%, placing DFM as one of the best performing exchanges globally since the beginning of the year. Trade value is amounted at US$ 37.30 Billion YTD, a 200% growth compared to the corresponding period of last year.

DFM is at the heart of the global economy with Dubai’s position as the capital markets hub and gateway to the Middle East and North Africa (MENA) region. Our exchange is easily accessible for foreign investors and most of our listed companies are open to foreigners.

FOCUS: How active are foreign investors in your exchange? How accessible is your market?

DFM: DFM has always been on the radar of foreign investors since its inception in the year 2000 attracted by the sizeable investment opportunities and easy accessibility. DFM is an investor centric market with no restriction on capital repatriation, minimal risk as well as being a tax free exchange. Currently, foreign investors account for 16% of the total market ownership and 43% of total trading activity. Retail investors own 29% of the total market capitalization while their trading accounts for 76.5%. Currently, we have 65 listed securities including; 12 Banks, 8 Investment & Finance, 13 Insurance, 7 Real Estate, 4 Transport, 2 Industrial, 5 Consumer Staples, 2 Telecom, 2 Services and 10 on NASDAQ Dubai.

FOCUS: What new project/product are you currently working on?

DFM: Over the past years DFM has actively implemented various enhancements including; technology upgrades such the new trading system (X-stream), various brokers and issuer services such as; margin trading, iVESTOR cards, 24/7 reporting, market data feeds and online advertising opportunities. New products and services underway include; the introduction of right issues, equity swaps, warrants, Securities Lending and Borrowing and e-IPO services.

FOCUS: What are the challenges you see in your market today and in the future?

DFM: The most persistent challenge we are relentlessly addressing is to realize the full characteristics of Dubai and the UAE economy. Our ultimate goal is to have our growing economic sectors represented in the market. Currently, as much as 70% of our economy is not represented in the market which is highly dominated by the traditional sectors of banking and real estate. We are actively promoting the diversification of investment opportunities available on DFM through attracting companies from the growing sectors such as tourism, retail, healthcare and education.

FOCUS: How do you assess your exchange’s position at a time of increased globalization?

DFM: DFM is at the heart of the global economy with Dubai’s position as the capital markets hub and gateway to the Middle East and North Africa (MENA) region. Our exchange is easily accessible for foreign investors and most of our listed companies are open to foreigners. Currently DFM has more than 270,000 foreign investors in addition to over 500,000 UAE investors meaning that foreigners represent 35% of registered investors on our exchange. DFM’s listed securities are not only UAE based companies but also include many dual listings from around the region such as Kuwait, Bahrain. In fact, we are the most favoured listing venue when it comes to dual listings. We are included in the key Emerging Market indexes such as S&P Dow Jones, FTSE and Russell. MSCI has upgraded the UAE market to Emerging Market Status and this will take effect mid of 2014. DFM represents a proxy for foreign investors to benefit from the appealing investment opportunities in this important part of the world with its vast wealth and growing development.