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Dubai Financial Market falling on bad times; Nasdaq Dubai buoyed

First some background.

On December 21, 2017, the Dubai Financial Market (DFM) agreed to acquire NASDAQ Dubai for $121 million in cash and 40 Million in DFM shares. DFM acquired 100% of the share capital of NASDAQ Dubai from Borse Dubai and NASDAQ OMX, who respectively owned 66.7% and 33.3% of the purchased entity.

Nasdaq Dubai, which opened in 2005 as the region’s international exchange, is aiming high for 2019.

DFM is undergoing the worst underperformance in the region this year.

So what?

Read Warning! Stocks around the GCC are taking a hit

Nasdaq Dubai launches futures trading mid-January

Reuters says Nasdaq Dubai will launch futures trading on the MSCI United Arab Emirates equity index from 15 January, providing investors a new avenue to gain exposure to companies in the UAE.

The benchmark index currently comprises 11 UAE companies, among the largest and most liquid in the UAE, including ports operator DP World, Dubai’s biggest listed developer Emaar Properties and the country’s top lender First Abu Dhabi Bank.

“It will encourage further participation from investors including regional and international funds seeking to increase their exposure to the UAE’s investment landscape,” Hamed Ali, chief executive of Nasdaq Dubai said in a statement.

Nasdaq Dubai at DFM

Nasdaq Dubai’s derivates market opened in 2016 and currently comprises stock futures on 17 top UAE listed companies as well as futures on Dubai Financial Market’s General Index (DFMGI) share index and the ADI index of Abu Dhabi Securities Exchange.

The DFMGI tracks a basket of leading DFM-listed companies, providing broad exposure to the UAE economy in vibrant sectors including property, banking, telecoms, insurance, and transport

Reuters also identified 12 Saudi companies, which have a combined market capitalization of 859 billion Saudi riyals ($229 billion), representing 43% of the Saudi stock exchange that will be traded on Nasdaq Dubai in Saudi riyals (SAR), which is the currency of the underlying shares.

Read: Saudi women turn their attention to the stock market

“The companies are Saudi Basic Industries Corp (SABIC) , Al Rajhi Bank, Alinma Bank, Almarai Company, Dar Al Arkan Real Estate Development Co, Etihad Etisalat Company, Rabigh Refining and Petrochemical Co, Saudi Arabian Mining Company , Saudi Cement Company, Saudi Electricity Company, Saudi Kayan Petrochemical Company and Altayyar Travel Group,” said Reuters.

Nasdaq Dubai’s tradable products currently include equities and equity derivatives, and the exchange can also list and trade mutual funds, exchange-traded funds, and structured products.

Dubai Financial Market (DFM) and Nasdaq Dubai had signed a license agreement under which futures contracts linked with the DFMGI will be traded on Nasdaq Dubai’s equity futures market.

UAE daily The National says the equities and derivatives exchange continues to expand its market and improve product offerings for investors

“The futures on the UAE index are being launched under a 2017 license agreement which also enables Nasdaq Dubai to launch futures and options on MSCI indexes of a number of GCC and regional equity markets. More than $11 trillion in assets under management is estimated to be benchmarked to index provider MSCI’s gauges worldwide,” reports the National.

VIDEO: How did Saudi stocks push Tadawul over 8,000 for 1st time since 2015?

Nasdaq Dubai attracts more Sukuk

Nasdaq Dubai has welcomed the listing of a $200 million Sukuk issued by the Emirate of Sharjah. It is the Emirate’s second Sukuk listing on the exchange this year, following a $1 billion listing in March, reported Mondo Visione.

“The total value of Sukuk listings on Nasdaq Dubai by the Emirate of Sharjah has now reached $2.45 billion, including listings of $750 million and $500 million in 2014 and 2016 respectively, says Mondo Visione.

“The latest listing, which took place on December 19th, has raised the total value of Sukuk currently listed in Dubai to $60.39 billion, the largest amount of any listing center in the world.”

A total of 14 Sukuk valued at $12 billion have listed in 2018.

Read: Dubai stocks lowest since 2016, Kuwait market on the rise

DFM woes continue

Nasdaq quoted Reuters as reporting real estate shares leading Dubai stock market lower on Thursday, while all major Middle Eastern bourses fell with other global equity markets after the U.S. Federal Reserve hiked rates and oil prices slid.

“In Dubai, the index was down 1.1%. The index is down more than 25% percent so far this year, making it the worst-performing market in the Middle East,” said Reuters.

Developer Union Properties lost 3.7% and DAMAC Properties declined 4.1%.

Nasdaq Dubai at DFMDubai’s real estate downturn is forcing construction and engineering firms to cut jobs and halt expansion plans, raising fresh risks for the wider economy, according to Reuters.

Saudi Arabia’s index fell for a third straight session, slipping 0.6%, a day after the government released its 2019 budget.

The Abu Dhabi index lost 0.4% as Aldar Properties lost 1.9% and Dana Gas shed 3.4%.

Since 2000, Dubai Financial Market (DFM) has been operating as a secondary market for the trading of securities issued by listed companies, bonds issued by federal or local governments, local public institutions, and mutual funds as well as other local or foreign DFM-approved financial instruments.