MENAFN - Oxford Business Group
Dubai- Marketing and bonding
(MENAFN - Oxford Business Group) New products along with the promise of an expanded bond market could herald an era of fresh dynamism for Dubai's capital markets, despite their difficult time of late.
Currently, the emirate is almost spoiled for choice in its capital markets, with two main exchanges for bonds and equities, along with the Dubai Gold and Commodities Exchange, which trades in commodity derivatives, and the Dubai Mercantile Exchange, which trades in energy and commodities.
The emirate's oldest exchange is the Dubai Financial Market (DFM), which started operations in 2000 to provide a market for investors to buy and sell the stocks of publicly held companies in the UAE. As of the beginning of March, the DFM had 65 companies listed on its boards, while also conducting bonds, Islamic sukuk and mutual funds trading, though at a low volume.
The other main equities exchange is the Nasdaq Dubai, located within the Dubai International Financial Centre (DIFC). The exchange, which opened in 2005 to trade in both local and overseas equities, was re-branded in November from the Dubai International Financial Exchange (DIFX), with the name changing to its present form. The move was a reflection of the market's close links with the Nasdaq OMX Group, the world's largest exchange company, which owns a one-third stake in the exchange.
The name change, as well as Nasdaq OMX's initial buying into the DIFX in February 2008, was also a reflection of the further internationalisation of Dubai's capital markets. Firms trading on the US Nasdaq and Scandinavian OMX exchanges now have the opportunity to cross list in Dubai.
Both Nasdaq Dubai and the DFM are controlled by Borse Dubai, the state-owned holding company established to consolidate the management of the two exchanges as well as investments in other exchanges. The company itself made capital market headlines in mid-February when it closed a fully subscribed 2.5bn (Dh9.1bn) syndication to refinance part of its 3.78bn debt, which had been set to mature on February 28.
The Nasdaq Dubai is regulated by the Dubai Financial Services Authority (DFSA), which is the independent body charged with overseeing all of the financial and ancillary services within the DIFC. Both the exchange and the DFSA work closely with the federal Emirates Securities and Commodities Authority as well as the UAE central bank.
Though Dubai's capital markets have experienced a sharp downturn over the past year, with the DFM dropping 72.4% in 2008 and the Nasdaq Dubai also sliding, it is hoped that these losses have bottomed out and that new developments will help regenerate the financial sector.
One such development occurred on March 2 with the launch of a new sharia-compliant tradeable security, backed by gold and to be traded on the Nasdaq Dubai. The securities will be marketed by Dubai Commodity Asset Management, a unit of the Dubai Multi Commodities Centre (DMCC).
According to Ahmed bin Sulayem, executive chairman of the DMCC, the new securities trading will open up fresh opportunities for investors.
"Dubai Gold Securities will establish a benchmark for investors looking for innovative solutions to invest in commodities within the framework of Islamic finance," bin Sulayem said at the launch of the security.
The capital market had received a boost in mid-February, when the Dubai government announced it was launching a 20bn bond to fund its financial obligations and press ahead with development projects. On January 10, the government released details of its budget for the forthcoming year, which included its first-ever projected deficit, a shortfall of 1.1bn, as well as a 42% increase in public spending.
A statement issued by the Dubai Department of Finance said the bond would provide the government with the necessary funds amidst the deepening global liquidity crunch.
The bond issue received an immediate response, with the UAE Central Bank subscribing to the first issuance of 10bn worth of the five-year bonds.
In November, Mohamed Alabbar, head of a special committee established to develop strategies to combat the global economic crisis, said the state was carrying debts of 10bn, while government-operated companies had about 70bn of debt burden.
While this is only a fraction of the 350bn that Alabbar said the government and affiliate companies hold in assets, there were concerns that Dubai would have difficulties meeting some of its short-term debt and in being able to inject new funds into the economy. With the launching of the government bonds, some of these concerns have been eased.
To date, there has been little in the way of a bond market in Dubai, mainly due to the state running a substantial budgetary surplus. However, changing circumstances mean bonds could play a greater role in the emirate's capital markets, giving investors yet another option while simultaneously encouraging the development of a private bonds market.
According to Nasser Saidi, chief economist for the DFIC, the new bonds will allow the Central Bank to establish a government bonds and sukuk market, eventually leading to open market operations in terms of the selling and purchase of government bonds.
Moreover, the bonds will allow companies to price bonds and sukuk, which they will offer through the Dubai government's bonds index, as well as provide the emirate with enough liquidity to complete its construction and infrastructure projects, Saidi said in an interview with the local media on February 24.
Though Dubai's capital markets may have had a lean year in 2008, the final pieces are being put in place for them to make the most of the economic recovery when it comes.
MENA News Headlines
|Mar 7 2014||Cement demand to grow on infrastructure projects in Oman ,MENAFN|
|(MENAFN) Infrastructure projects in Oman is expected to reflect a high growth on the cement sector, according to Oman Observer.
Omani government plans to launch developing transport and social ...|
|Mar 7 2014||Aviation sector to register highest growth in ME ,MENAFN|
|(MENAFN) Traffic in air passenger and air cargo is expected to outperform in the Middle East by 2032 compared to all other regions, according to Oman Observer.
Air passenger traffic in the Middle ...|
|Mar 7 2014||UAE's Danube revenue up 17 percent in H2 ,MENAFN|
|(MENAFN) Sales revenue of Danube Group, a leading construction and home interior company in the UAE, was estimated at USD 544 million in 2013, according to Khaleej Times.
Revenue rose by up to 17 ...|
|Mar 7 2014||UAE, Serbia sign USD1 b loan deal ,MENAFN|
|(MENAFN) UAE's Department of Finance has signed a USD1 billion loan deal with Serbian Finance Minister in a visit to Abu Dhabi, according to Khaleej Times.
The loan deal aims to strengthen ...|
|Mar 6 2014||Cement demand in Oman to grow 6 percent annually ,MENAFN|
|(MENAFN) Cement demand in Sultanate of Oman is expected to grow in the upcoming few years, Times of Oman reported.
Huge infrastructure and tourism projects in the Gulf nation will push cement ...|
|Mar 6 2014||Gulf investors to invest in Moroccan private sector ,MENAFN|
|(MENAFN) A partnership between Saudi Islamic Corporation for the Development of the Private Sector (ICD) and Morocco-based Al Ajial Funds has been signed to invest jointly in Morocco's private ...|
|Mar 6 2014||UAE top importer of Swiss watches in region ,MENAFN|
|(MENAFN) The Federation of the Swiss Watch Industry said that the UAE ranked first as the primary Middle Eastern country in the Top Ten list of importers of Swiss watches, Saudi Gazette ...|
|Mar 6 2014||Bahrain oil, gas, water projects at USD14b ,MENAFN|
|(MENAFN) Bahrain has re-asserted itself as a regional powerhouse in the oil & gas as well as power & water sectors, Saudi Gazette reported.
The country has USD14 billion worth of oil, gas power ...|
|Mar 6 2014||Jacobs wins BP contract in Oman ,MENAFN|
|(MENAFN) Jacobs Engineering has been awarded with contract by BP for process and infrastructure work on the greenfield Khazzan project in Oman, Times of Oman reported.
Vice president of Jacobs ...|
|Mar 6 2014||Al Futtaim Carillion wins USD250m contract in Dubai ,MENAFN|
|(MENAFN) Al Futtaim Carillion announced that it has won a contract by Meraas in the UAE, Arabian Business reported.
The USD250.66 million contract is for the construction of the Avenue Phase 2 ...|
|Mar 6 2014||Hilton plans Qatar expansion ,MENAFN|
|(MENAFN) Hilton Worldwide is planning to expand in Qatar with the signing of a management agreement with First Qatar Real Estate Development Company, The Peninsula Qatar.
The management agreement ...|
|Mar 6 2014||Saudi MERS death toll rises to 62 ,AFP|
(MENAFN - AFP) Saudi health authorities said Thursday a man has died from the MERS coronavirus, bringing the death toll from the respiratory disease in the worst-hit country to 62.
The 55-year-old ...|
|Mar 6 2014||Olsen writes off England's World Cup chances ,Kora|
|(MENAFN - Kora) Daniel Sturridge scored the only goal of the game with a header eight minutes from time after England had looked set to fail to win at Wembley for a third consecutive game - following ...|
|Mar 6 2014||Sabella blames tiredness for dour showing ,Kora|
|(MENAFN - Kora) Sabella's team were nowhere near their best in Bucharest on Wednesday, with captain Lionel Messi particularly underwhelming as he appeared to struggle with illness.
|Mar 6 2014||'Happy' Keane to stay with Galaxy ,Kora|
|(MENAFN - Kora) The Ireland international, 33, has made 55 league appearances for the Galaxy, scoring 31 goals and helping them to two MLS Cup titles, while also bagging the club's MVP award last ...|
|Mar 6 2014||Del Bosque predicts bright future for Costa ,Kora|
|(MENAFN - Kora) Costa, who represented Brazil in two friendlies before pledging his international loyalty to Spain, where he plays for Atletico Madrid, started against Italy on Wednesday as his new ...|
|Mar 6 2014||International Friendly: Mexico 0 Nigeria 0 ,Kora|
|(MENAFN - Kora)
It was a chance-filled affair at the Georgia Dome, with all three participating goalkeepers - Guillermo Ochoa (Mexico), Vincent Enyeama and Austin Ejide (Nigeria) - all producing ...|
|Mar 6 2014||Flyers soar over Washington in NHL ,Kora|
|(MENAFN - Kora) The Flyers and Capitals are among the backlog of teams vying for play-off spots in Metropolitan, with the Flyers sitting second on 72 points, just five clear of the sixth-placed New ...|
|Mar 6 2014||NATO Steps Up Cooperation with Ukraine ,Qatar News Agency|
|(MENAFN - Qatar News Agency) NATO is stepping up its cooperation with Ukraine while reviewing cooperation with Russia, the NATO Secretary-General Anders Fogh Rasmussen said.
Speaking after talks ...|
|Mar 6 2014||Libya: Niger Extradites Gaddafi's Son Saadi ,Qatar News Agency|
|(MENAFN - Qatar News Agency) The Libyan government announced today that former leader Muammar Gaddafi's son, Saadi, has been extradited from Niger and is now in custody in Tripoli.
Saadi Gaddafi ...|