Dubai Financial Market (DFM):
DFM, formed in the year 2000, ("DFM") is one of the two local stock markets in the U.A.E. It grew by 131 per cent in 2005 (with a growth rate for 2003 to 2005 of 109%) and saw a daily average turnover for that period of AED 1.35 billion (or US$ 367.85 million). In 2006, the market saw a similar daily turnover (AED1.24 billion or US$ 337.9 million), but the index lost ground, falling 44 percent for that year. It recovered 44 percent in 2007.
Volumes hit highs in 2006 at over AED 4.5 billion (US$ 1.2 billion) per day and highs of AED 14 billion per day (US$ 3.81 billion) in 2007. The DFM is the most liquid market in the U.A.E.
Recent DFM statistics include;
Growth in: |
2004 |
2005 |
2006 |
2007 |
Q1 2008 |
The DFM General Index |
172% |
131% |
-44% |
44% |
-9.7% |
Market Capitalization USD Billions |
38 |
112 |
88 |
139 |
141 |
Total Market Value |
1,177% |
694% |
-14% |
6% |
26.19% |
No. Shares Traded |
1,470% |
342% |
75% |
158% |
27.36% |
No. of new companies listed |
29 |
46 |
52 |
56 |
59 |
Source: MAC Research
It had a total market capitalization at 30th April, 2008 of US$ 149 billion and 59 companies were listed.
The number of GCC companies seeking dual listing on the DFM is also increasing, with three new Kuwaiti companies listing in September 2007 alone.
The market settles on a T+2 basis.
Abu Dhabi Securities Exchange (ADX):
The other local exchange is the Abu Dhabi Securities Exchange (the "ADX").
Recent ADX statistics include;
Growth in: |
2004 |
2005 |
2006 |
2007 |
Q1 2008 |
The ADX General Index |
75% |
69% |
-42% |
51% |
0.1% |
Market Capitalization USD Billions |
56 |
139 |
81 |
124 |
122 |
Total Market Value |
343% |
541% |
-33% |
148% |
113.83% |
No. Shares Traded |
303% |
773% |
37% |
361% |
109.54% |
No. of new companies listed |
35 |
59 |
60 |
64 |
64 |
Source: MAC Research
In 2006, the average daily market value of the ADX saw AED 250 million (US$ 67 million) and 2007 saw AED 721.58 million (US$ 196.48 million) per day. Volumes have increased dramatically in early 2008.
It had a total market capitalization at 30th April, 2008 of US$ 134 billion and 64 companies were listed.
The market settles on a T+2 basis.
Overall, the ADX and DFM's combined turnover for the first quarter of 2008 (AED 199.3 billion) increased by almost three times over the same quarter in 2007 (AED 56.1 billion)
The Future Prospects
Currently, the UAE markets (ADX and DFM) ranks second in terms of market capitalization. IPO's have been very well received in both the markets and some of the very successful IPO's include Dana Gas which saw US$ 78.5 billion received to subscribe for only US$ 561 million targeted IPO funds. Individuals and institutions from 87 countries applied, demonstrating the demand in the market. This issue was over-subscribed 140 times. DFM's IPO was another success story with issue being oversubscribed 132 times.
There are number of factors promising strong growth in ADX and DFM, some of them are:
- New regulations proposed under the new Companies Act, permit companies to sell only a minimum of 30 per cent of their enlarged issued capital under an IPO (currently 55 per cent).
- Regulations are currently being adopted to enable IPO pricing to relate more of the fundamental value of the company (currently based on par value).
- These changes will substantially increase the number of new issues from the family groups (i.e. a very significant increase in IPO's).
- The Dubai Government plans several significant new IPO's, such as the Emirates Airlines, Nakheel.etc, (again substantially increasing market volumes).
- The extensive surplus cash in the UAE and the region arising from oil revenues.
- The relatively low P.E.'s when one considers the corporate profits.
- Substantial population growth.
- Asset inflation arising from inter alia, the following US dollar
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