Equities

NASDAQ Dubai was the GCC’s second largest market for IPOs by value in 2008, after the Tadawul in Saudi Arabia. A total of $689 million was raised by two Dubai-based companies; first Depa ($418 million) in April and then Damas ($270.6 million) in July. The successful raising of capital in these listings augurs well for NASDAQ Dubai’s future as a platform of choice for regional IPOs.       

The exchange also welcomed five secondary equity listings. In June, Netsol Technologies, primarily listed on NASDAQ, became the first US company to list on NASDAQ Dubai; and in October, China Security and Surveillance Technology, primarily listed on NYSE, became the first Chinese company to do so. In November, BH Global and BH Macro, managed by the hedge fund manager Brevan Howard, became the first funds to list on the exchange, with their primary listing on the LSE. NASDAQ OMX listed its shares later in the month. The diversity of these listings demonstrates NASDAQ Dubai’s appeal as a listing destination for issuers around the globe seeking regional investment and visibility.

Derivatives market

The launch of the UAE’s first equity derivatives market – and the first substantial platform of this kind in the GCC – was a significant step forward for the region’s capital markets. It has given investors a valuable new tool for hedging risk. The market launched in November with futures on the FTSE NASDAQ Dubai ‘UAE 20’ index  and on 21 individual UAE stocks, including DP World on NASDAQ Dubai (Details) . We welcomed Arqaam Capital to the exchange as a Member trading derivatives and Susquehanna International Securities as a market maker. From this base the market is well placed to mature and attract new investors over 2009. In particular we look forward to bringing on a general clearing member to facilitate increased trading.

Other listings

Nine Sukuk listed over the year with a total value of $6.33 billion (Details), cementing NASDAQ Dubai’s position as the largest exchange in the world for Sukuk listings by value. The total value of the exchange’s 19 Sukuk was $16.45 billion at the end of 2008.

Merrill Lynch listed a 10-year inverse tracker certificate on GCC stocks in the latest addition to NASDAQ Dubai’s TraX structured products market, launched in 2007.

Our reported trading volumes rose substantially from September (Details), when we implemented a requirement that all over-the-counter trades be reported to the exchange. This reporting rule is standard on international exchanges and gives a clearer picture of activity in our listed stocks.  

Over the year total trading volumes rose 117% over the 2007 figure to 2.39 billion, while the number of trades rose 281% to 29,862.

NASDAQ Dubai showed in 2008  that it can be a  platform for high liquidity. In Q4, DP World traded higher volumes than 91% of the companies on the Dubai Financial Market (DFM) and 95% of the companies on the Abu Dhabi Securities Exchange (ADX). Depa traded higher volumes than 73% of DFM companies and 78% of ADX companies,  while Damas’ volumes were higher than 58% of DFM stocks and 38% of ADX stocks

The rebranding of the exchange as NASDAQ Dubai in November, from its former name of Dubai International Financial Exchange (DIFX), has much more than symbolic significance. It followed the purchase by NASDAQ OMX Group in February of a one-third stake in the exchange, with Borse Dubai retaining two thirds. The new name emphasises both our strong links with NASDAQ OMX, the world’s largest exchange group, and our location in the region’s financial centre.

In July we adopted NASDAQ OMX’s sophisticated X-stream trading platform. We also benefit from the expertise of NASDAQ OMX personnel, from Bob Greifeld and Adena Friedman on our Board to other employees of the group who have given valuable advice and support in listings, legal and marketing activities. Company listings on NASDAQ Dubai were displayed on the seven-storey NASDAQ Tower in Times Square, New York.

The announcement of our rebranding marked the start of an extremely active few days, in which we launched our derivatives market, listed NASDAQ OMX on our exchange, and held an investor conference in Dubai jointly with NASDAQ OMX, before rounding off the week with a celebratory NASDAQ stock market Opening Bell ceremony at The Gate, in the Dubai International Financial Centre (DIFC). 

More than 30 companies presented at the investor conference, including Citigold, Damas, Depa, NASDAQ OMX and Netsol from our own market. Executives of these and many other NASDAQ Dubai companies then took part in the globally televised NASDAQ Opening Bell ceremony, the first to be held in the Middle East. It was opened by His Highness Sheikh Maktoum Bin Mohammed Bin Rashid Al Maktoum, Deputy Ruler of Dubai and attended by many other senior figures, including His Excellency Sultan Ahmed Bin Sulayem, Chairman of DP World, NASDAQ Dubai’s largest primary listed  company.

The memorable evening event outside The Gate attracted more than 600 guests in celebration of the rebranding of the DIFX  to its new name of NASDAQ Dubai. In a speech from the stage, His Excellency Dr Omar Bin Sulaiman, Governor, Dubai International Financial Centre (DIFC) and Vice Chairman, Central Bank of the UAE, welcomed the move as a significant step forwards in the development of the region’s capital markets and of the DIFC as the region’s international financial centre. As chief Executive of NASDAQ Dubai, I presented a crystal gift to His Highness Sheikh Maktoum Bin Mohammed Bin Rashid Al Maktoum, Deputy Ruler of Dubai, as did ob Greifeld, Chief Executive of NASDAQ OMX, to commemorate the ceremony, which culminated in the ringing of the Opening Bell of the NASDAQ stock market at 6.30pm Dubai time (9.30am in New York, where NASDAQ is based). Executives of issuer companies on both NASDAQ Dubai and NASDAQ OMX gathered on the stage and waved in celebration and the entire ceremony was displayed live on a wide screen on the NASDAQ Tower in New York’s Times Square. Seated on the stage throughout were His Excellency Mohammed Al Gergawi, Minister of State for Cabinet Affairs and His Excellency Sultan Ahmed Bin Sulayem, Chairman of DP World, together with Essa Kazim, Chairman of Borse Dubai; Soud Ba’alawy, Chairman of NASDAQ Dubai; Jamal Majid Bin Thaniah, Executive Vice Chairman, DP World; Mohammed Sharaf, Chief Executive, DP World; Tawhid Abdullah, Chief Executive, Damas;  Mohannad Sweid, Chief Executive, Depa; and Magnus Bocker, President, NASDAQ OMX. The success of the event, together with the support it received from the DIFC and the staff of many of the banks and other firms based there, marked a further step in NASDAQ Dubai’s expansion as the region’s international exchange. For more pictures of the ceremony click here.

Retail investors will play a growing role in NASDAQ Dubai’s market. We took a series of steps towards the end of 2008 to make it easier for individuals to access the exchange. One was the extension of our Monday-Friday opening hours to 10am – 5pm, from 11am – 2pm previously. We also began opening for the first time on Sundays, from 10am – 2pm. These timings brought our market closer in line with the other GCC exchanges on which investors are active.

We also announced that equity listings can now be made in UAE Dirhams, which previously had not been possible. The currency of all our equity listings so far has been the dollar. Our research showed that Dirham listings may appeal to some issuers who seek UAE investors, as these are accustomed to investing in Dirhams on the local UAE exchanges. Depa later secured shareholder approval to switch to Dirhams, should the company’s Board decide to do so.

Starting in early November we welcomed the first Members to join the exchange from the regulatory jurisdiction of the UAE. The new Members are: Mashreq Securities; Union Brokerage Company; Al Ramz Securities; and Direct Broker for Financial Services (DBFS), the operator of the Mubasher Trade online trading system. These brokers help provide a healthy regional balance to the exchange’s international institutional liquidity. Six other Members also joined the exchange in 2008 (Details).

 

NASDAQ Dubai Academy ran courses in 11 finance topics over the year, attended by nearly 500 market professionals, members of the public and university students. Courses included a 2-day derivatives workshop and 1-day seminars in: Islamic capital markets; awareness of NASDAQ Dubai’s market; DIFC rules and regulations; and anti-money laundering. Forty-nine people, representing 17 brokers, passed the NASDAQ Dubai Trading Managers exam during the year after attending the Academy’s Trading Managers course. (click here for Academy website).   

A reduction in IPO activity, resulting from the global economic downturn, looks likely to  affect NASDAQ Dubai in the short-term. In the long-term we are well placed, as the  international exchange serving our region, to benefit from recovery when it comes. Our focus in 2009 will include expanding our derivatives market, developing new asset classes, and strengthening our links with retail investors. In particular we will intensify our education and awareness programmes. In a difficult economic environment, we will prepare for expansion.