What have been the main developments in the financial sector in Dubai over the past year?
The past 12 months have been momentous at DFM. We have seen encouraging trading activity, while the DFM's General Index was up by 12% by year-end 2014. Despite the fact that this growth falls short of the wonderful performance of the index in 2013 when it jumped more than 107%, it indicates the resilience of DFM as it managed to keep its momentum after going through two periods of sharp decline during the year. Daily average trading value has increased up 136.7% to $441 million compared to $174 million during 2013. These indicators are the result of growing demand by investors as they increasingly recognize the opportunities available on the market as well as the strong expansion of Dubai's economic sectors. It also reflects the integrity of the market infrastructure in line with international best practices. In 2014, we have seen a revival of IPO activity with four IPOs listed on DFM by Marka, EMAAR Malls, Amanat as well as Dubai Parks & Resorts. Other listings are on the horizon. These developments indicate a resurgence in this sector, which will have an enormous effect on DFM as many companies are well prepared to take the same route, based on our communication with them and as a direct outcome of our extensive efforts over the past years to educate private and family businesses on the benefits and requirements of the capital markets as part of preparations for the post IPO and listing environment. In fact, what has been achieved is the outcome of years of hard work to implement DFM's sustainable growth strategy. This aims to cope with international best practices and the evolving needs of our growing investor base locally and internationally, provide investors and issuers with value-added services, and diversify investment opportunities through attracting new listings of companies operating in dynamic and rapidly growing economic sectors. DFM has implemented several enhancements and introduced numerous financial instruments and mechanisms such as market making, ETFs, securities lending & borrowing (SLB), direct market access (DMA), rights issues, covered warrants, and the pre-closing session. The year 2014 has also seen an increased pace in our efforts to realize the vision of HH Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, to position Dubai as the capital of the Islamic economy. The DFM published its “Standard for Issuing, Acquiring, and Trading Sukuk" as a first-of-its-kind comprehensive standard that provides issuers and investors the necessary framework and further promotes growth in the Islamic finance sector as one of the main pillars of the initiative. DFM's steady efforts to encourage issuers to list their sukuk on Dubai exchanges have played a pivotal role driving the total value of sukuk listed on the Dubai capital markets up to more than $25 billion compared to $9 billion before the launch of the initiative in early 2013.
With the sharp drop in oil prices, investors have been broadly selling off stock throughout the Middle East, creating stock value drops of up to 6.5%. What is your expectation for the financial markets in the Middle East in the next year?
Without jumping into predictions on market performance or investor sentiment, we believe that the outlook is encouraging in light of the macroeconomic indicators and the favorable business environment. As far as DFM is concerned, we believe that its remarkable performance is well founded based on the strong performance of the UAE economy and the buoyant outlook for Dubai over the coming years with the well-deserved success of its Expo 2020 hosting bid. Moreover, we believe that having new companies from multiple and dynamic economic sectors on board, the diversifying of liquidity sources, and a healthier balance between retail and institutional investors will play a crucial role in sustaining market activity and restraining volatility. From a wider regional perspective, we think that the regional financial markets in general are currently in a very healthy position on the back of robust economic activity and strong corporate earnings.