In the last few months the UAE has taken two critical steps that expand its infrastructure, which are unique in this region. They confirm the UAE’s regional leadership role in capital markets development and will in due course lead to the kind of upsurge in market activity that will benefit all parties involved locally and regionally.
Hamed Ali answers questions from Salaam Gateway, a new Islamic finance portal launched at the Global Islamic Economy Summit on October 5 by Dubai Islamic Economy Development Centre (DIEDC) and Thomson Reuters.
Capital markets cooperation between Arab countries is key to unlocking their economic potential and promoting the prosperity of their people. While significant progress has been made over the years, there is plenty of scope for faster development. So it is gratifying to see that in recent months significant steps have been taken linking the markets of the UAE and Egypt.
The great majority of Sukuk issuers have traditionally opted not to list their securities on an exchange. For a variety of reasons, they have not felt it necessary or even desirable. There are clear signs, however, that the appeal of a listing is growing, as the sector matures, new actors become involved, and attitudes change.
Like conventional bonds, Sukuk are traded overwhelmingly over the counter (OTC). This pattern has been established since the first Sukuk issuances nearly 15 years ago. However, efforts to provide investors with attractive alternatives are well underway, including initiatives by several exchanges to bring trading on to their platforms.
Collaboration is the lifeblood of the capital markets. This has been true for many decades in conventional finance, where close relationships involving global financial centres such as New York, London and Hong Kong have spurred the rapid introduction of a sophisticated range of new asset classes and securitisation
structures, as well as the expansion of different types of fund and cross-border investment opportunities.
The rapid expansion of the Sukuk sector is a welcome development for all of us who recognize its value as an ethical and efficient means of raising capital. It is not only that the pace of growth is impressive, with global issuance expected to reach 70 billion dollars this year, according to Moody’s, compared to 32 billion dollars in 2010.
Many companies would like to go public in an IPO, but are unsure what is involved. Your questions about how to prepare are answered here.
If 2013 was a year when the UAE’s capital markets staged a strong recovery, I believe 2014 will show that it was built on solid foundations. Activity will gather pace and opportunities will grow.
With tens of thousands of SMEs in Dubai, it can be hard for the best companies to stand out from the competition. Well run businesses with great products jostle for success alongside less efficient rivals selling inferior wares – and if is often hard for outsiders to tell the difference.