dubai financial market
TRANSCRIPT
Dubai Financial MarketInvestor Presentation
2011 - 2012
www.dfm.ae
i
MENASA Region : Macroeconomics ………………………. 1
Dubai : Middle East‟s Financial Hub ………………………. 5
UAE Capital Markets : DFM / ND / ADX ………………………. 9
Two Exchanges, One Market : DFM & ND …………………….... 14
Corporate Strategy : Going Forward …………………….... 24
THE REGION – MENASA / GCC/ UAE
AN ECONOMIC POWERHOUSE
www.dfm.ae
2
Iran
1,745
38 158
99 103
1,347
MENASA GCC NORTH
AFRICA
LEVANT &
TURKEY
IRAN & IRAQ SOUTH ASIA
Population 2008
(Million)
4,248
1,073
542 836
426
1,371
MENASA GCC NORTH
AFRICA
LEVANT &
TURKEY
IRAN & IRAQ SOUTH ASIA
GDP 2008 (USD Billion)
7.1 7.3 7.4
9.4
10.0
6.0
6.9
2.71.4
2.6
1.52.0
2.2 1.51.2
0.9
MENASA GCC North Africa
Levant Iran South Asia
US UK
Expected GDP and Population Growth
( 2007 -2014 CAGR - %)
GDP Population
59%
15%
1%
9%
33%
17%
8% 8%
MENASA North America Europe South America
Oil Reserves & Production
as a % of Global Total
Oil Reserves Oil Production
1.7x
0.8x
0.1x 1.1x
Menasa regions is
emerging as a
powerful
economic bloc
with tremendous
growth potential,
combining the
sovereign wealth
funds (SWFs) of the
Mena region to
the economic
growth story of,
say, India, hence,
the economic
paradigm shift
towards this region
from other
emerging markets.
7% of global GDP
MENASA REGION :SOLID ECONOMIC FUNDAMENTALS
-PROMISING GROWTH
Source: IMF, World Bank
www.dfm.ae
3
Iran
MENASA REGION :SOLID ECONOMIC FUNDAMENTALS
-PROMISING GROWTH
$-
$30
$60
$90
$120
$150
Saudi Arabia UAE Egypt Qatar
Billio
ns
Top Destinations for
Foreign Direct Investment in MENA (2011)
The UAE, the second biggest Arab economy, is set to record 3.3% growth inGDP this year, led by a focus on adopting industrial policies that will drivesustainable development across the UAE.
-IMF 2012 Forecast
Source: IMF, World Bank
• UAE is ranked 22nd globally for Value
of Imports and 21st for Exports
• The UAE ranked 3rd in the world for
„quality of infrastructure‟
• UAE is leading venue for FDI in MENA
after Saudi Arabia
The UAE’s strong
fundamentals lessened the impact of the
global financial crisis
Country GDP Growth Projections
Country 2010 2011 2012e 2013e
Bahrain 4.1% 1.5% 3.6% 4.8%
Kuwait 3.4% 5.7% 4.5% 5.1%
Oman 4.1% 4.4% 3.6% 3.8%
Qatar 16.6% 18.7% 6.0% 4.3%
Saudi Arabia 4.1% 6.8% 3.6% 4.4%
UAE 3.2% 3.3% 3.8% 4.0%
www.dfm.ae
UAE:GROWTH PROSPECTS
• Recovery in oil prices• Strong growth in the non-
hydrocarbon sector
• UAE‟s service driven economy benefitting from the global trade
• USD 50 billion worth of infrastructural projects still under construction in UAE
UAE Trade Matrix UAE Import/Export Projections
Ke
y C
on
trib
uto
rs
to G
row
th
Oil / Gas as % of GDP (2011)
QATAR
UAE
SAUDI ARABIA
OMAN
BAHRAIN
61%
45%
41%
41%
21%
Source: Dubai Chamber of Commerce
4
DUBAI
THE FINANCIAL HUB OF MIDDLE EAST
www.dfm.ae
Strengths Reasoning
Highly sophisticated financial centre Dubai is ranked 7th as per „International Financial Centres Competitive Assessment
Report‟ , a competitive study of 15 key global and regional financial centres done
by KPMG
Favorable business environment Dubai has been rated very high in ease of doing business ranking 33rd globally.
-World Bank Index
Strategic location with a strong logistics
infrastructure to bolster trade
Trade capacity in UAE has tremendously improved over the years with free-zones
like JAFZA.
Solid tourism sector Hotel occupancy rates remained high throughout 2010, benefitting both tourism
and trade activities.
- DSC, 2010 Report
Dubai’s core
strengths remain
fundamentally sound
Dubai GDP Share Breakdown by
Economic Sectors – 2011
Source : Dubai Chamber of Commerce
“Our vision is clear, our goals are
obvious, our strengths are great, our will
is strong and we are ready. We want
Dubai to be a global center of
excellence, creativity and leadership”.
-HH Sh. Mohammed
Ruler of Dubai
Well diversified economy based on
international trade, banking and
finance, tourism, information
technology and real estate
DUBAI:VISION & ECONOMIC STRENGTHS
Manufacturin
g, 21.14%
Trade, 34.78%
Hotel &
Restaurants,
2.39%
Transport,
7.06%
Real Estate &
Construction,
19.43%
Financial
Sector, 8.39%
Government
Sector, 3.45%Other, 3.36%
6
www.dfm.ae
• Organizational restructuring of government departments & related entities
• Successful debt restructuring across all sectors with zero defaults
• GDP is projected to grow at 4% and above going forward, as per IMF, way above the average GDP growth of western counterparts
Seems like the stars are
aligning for Dubai once
again
While challenges remain, the Dubai economy is on a much sounder footing especially as much of the excesses and speculative elements of the economy have been weeded out. What Dubai is now left with is an unparalleled logistics, commercial, retail, communications
and transportation infrastructure in the region - and ready for business in a region that is sitting in a fresh pile of cash thanks to high oil prices.
DUBAI:RECENT EVENTS7
www.dfm.ae
Strong
Oil and gas
Manufacturing
Agriculture
Electricity/
Water
Communication
Government
services
Construction
Trade
Professional
services
Financial
services Tourism
Transportation
and storage
Very weak Average
Dubai’s strength by international standards
Globally fast growing industrieswith a strong position in Dubai
Globally fastergrowing sectors
Future globalgrowth
2010– 2015
Globally slowergrowing sectors
Average globalGDP growth
Sectors qualified to be part of futuregrowth path
Source : DSP 2015
DUBAI:GROWTH PROSPECTS8
CAPITAL MARKETS
UNITED ARAB EMIRATES
www.dfm.ae
Casablanca
Stock Exchange
Algiers Stock
Exchange
Tunis Stock
Exchange
Libya Stock
Exchange Egypt Stock
Exchange
Sudan Stock
Exchange
Istanbul Stock
Exchange
Tadawul
Tehran Stock
Exchange
Qatar
Exchange
Palestine Stock Exchange
Beirut Stock Exchange
Damascus Stock
Exchange
Iraq Stock
Exchange
Kuwait Stock
Exchange
Muscat Stock
Market
Karachi Stock
Exchange
Amman Stock
Exchange
Cash & Fixed Income Equity,
Index &
Commodity Futures
Only UAE offer a wide array of trade exchanges/products in the entire MENA region
CAPITAL MARKETS:KEY EXCHANGES IN THE REGION10
www.dfm.ae
DFM / ND Markets Breakdown
(USD Bn)
USD Billion
END-OF-PERIOD MARKET CAPITALIZATION (2002 – 2011)
Source : DFM/ND Analytics
ND 16.7
DFM 55.5
9.9
15
.1
37
.2
11
4.6
86
.9
13
8.7
83
.4
84
.6
70.5
72
.2
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
MARKET CAPITALIZATION
LIQUIDITY REVIEW11
www.dfm.aeSource : DFM/ND Analytics
TRADED VALUE - DFM
(2002 – 2011)
USD Billions
Thin trading is
recorded across all GCC
markets in 2011 with
average drop of 50-55% in
trade values as compared to
2010
0.8
1.1
13
.9
110.4
94
.8
10
3.4
83
.8
48
.1
20
.3
8.9
6
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
TRADE VALUES :DFM PERFORMANCE12
www.dfm.ae
7.7% 7.2%
37.3%
96.4%
109.1%
74.5%
100.5%
62.5%
28.0%
12.4%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
VELOCITY
(2002 – 2011)
MARKET VELOCITY
DFM PERFORMANCE
* Velocity = Annualized Trade Value / Average Market Capitalization
Source : Arabian Monetary Fund
13
DFM / NASDAQ DUBAI
TWO EXCHANGES, ONE MARKET
www.dfm.ae
Regulatory
Authorities
Stock Exchanges
ADX DFM NASDAQ Dubai
SCA(UAE Regulations)
DFSA (International Regulations)
19.9
%79.62%
1%
19.38%
66.67%
33.33%
Public
Stake
Ownership
Structure
100%
Government
of
ABU DHABI
UAE MARKETS :
REGULATIONS & OWNERSHIP15
www.dfm.ae
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Index movement remained
flat between
2010-2011
DFM : GENERAL INDEXYTD PERFORMANCE
52 WEEKS INDEX PERFORMANCE
16
www.dfm.ae
Source : DFM / ND Analytics
TRADING ACTIVITY BY CATEGORY
2006 2007 2008 2009 2010 2011
85
%
78%
71
% 79
%
78%
73
%
15%
22
%
29
% 21
%
22
%
27
%
INSTITUTIONAL
RETAIL
Trading Activity :
Client type Mix
Growth
movement is
seen among
institutional
investors with
2011 recording
27% market
share
2011 – TRADING ACTIVITY PATTERN
AVERAGE INSTITUTIONAL TRADING = 28.3%
AVERAGE RETAIL TRADING = 73%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
AVERAGE INSTITUTIONAL TRADING = 27%
DFM : TRADING PROFILESRETAIL VS. INSTITUTIONAL MIX17
www.dfm.aeSource : Reuters / DFM / ND Analytics
UAE VS. NON UAE
TRADING ACTIVITY
NON UAE TRADING ACTIVITY
2006 2007 2008 2009 2010 2011
9% 6% 5% 6% 6% 6%
17%
12%14%
22% 23% 22%
5%12% 18%
12% 15% 20%
GCC OTHER ARABS OTHERS
2006 2007 2008 2009 2010 2011
69% 70% 63% 60% 56% 52%
31% 30% 37% 40% 44% 48%
UAE Non-UAE
DFM : TRADING ACTIVITYLOCAL VS. FOREIGN INVESTMENT18
www.dfm.ae
Trade
Activity –
By Sector
2011
* Includes Materials / Utilities / Consumer Staples
7.11%
10.58%
12.72%
2.33%
2.19%
0.11%
0.01%
55.30%
9.66%
Telecom
Financial Services
Banking
Insurance
Services
Others
Industrial
Real Estate
Transportation
Source : Reuters / DFM / ND Analytics
DFM : TRADE MATRICESSECTOR MIX19
www.dfm.ae
Distribution
of Share Ownership 2006 -2011
BY TYPE OF INVESTOR BY NATIONALITY
FOREIGN OWNERSHIP AS % OF MARKET CAPITALIZATION
10%13%
8%12% 12% 12%
2006 2007 2008 2009 2010 2011
Foreign Ownership
2.60% 4.17%
4.76%
88.47%
ARAB
GCC
OTHERS
UAE
36%
64%
RETAIL
INSTITUTIONAL
DFM : OWNERSHIP SHARE OWNERSHIP RATIOS20
www.dfm.ae
DFM Share Price
Movement
2011
Trade Volume YTD 2010
AED
AED 0.84
DFM : MARKET ACTIVITY DFM SHARE PRICE21
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0.4
0.6
0.8
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www.dfm.ae
Revenue Breakdown2008-2010
DFM is
actively
moving
towards
revenue
diversificati
on with
2010
witnessing
40%
revenue
from
diversified
portfolio
DFM :
REVENUE MIX 22
2008 2009 2010 2011
63.2%
75.3%
60.2%
43.0%
32.0%
18.4%
28.5%
30.6%
4.8% 6.3%11.3%
26.4%
Trading Fee & Commisions Investment Income Other Income
www.dfm.ae
• Easy accessibility
• No income and capital gains tax
• Non-restricted repatriation of capital
• Minimal foreign exchange risk
• Foreign ownership allowed for most listed companies
• Diverse base of listed companies
• Local and international regulatory framework
• Innovative trading capabilities
DFM : INVESTOR-CENTRICATTRACTIVE PLATFORM FOR LOCAL &
INTERNATIONAL INVESTORS23
DFM : INVESTOR-CENTRICATTRACTIVE PLATFORM FOR LOCAL &
INTERNATIONAL INVESTORS
CORPORATE STRATEGY
DFM – NASDAQ DUBAI
www.dfm.ae
• Getting upgraded to MSCI Emerging Market Status
• G30 Compliance and addressing the gaps
• Organizational restructuring and monetization of financial services
• Initiating investor –centric services to increase liquidity
and trading activities post merger
• IPO focus and listings
STRATEGIC INITIATIVES
ADDRESSING FUTURE GROWTH25
www.dfm.ae
Key criteria's for Emerging market status
DFM is ready
and meets all eligibitly
criteria's for MSCI
upgrade to Emerging
market status
CRITERIA
A. ECONOMIC DEVELOPMENT
A.1 Sustainability of economic development
B. SIZE AND LIQUIDITY REQUIREMENTS
B.1 Number of companies meeting the following
standard index criteria
i) Company size ( Full market cap )
ii) Security size ( Float market cap )
iii) Security liquidity
C. MARKET ACCESSIBILITY CRITERIA
C.1 Openness to foreign ownership
C.2 Ease of capital inflows/outflows
C.3 Efficiency of operational framework
C.4 Stability of the institutional framework
Emerging
No requirement
3
USD 873 Mn
USD 436 Mn
15% ATVR
Significant
Significant
Good & tested
Modest
DFM / ND
Strong economic
fundamentals with
expected GDP
growth of 4% for
2011
12
USD 71 Bn
USD 17 Bn
33.5%
49% (Current Foreign
Ownership – 12%)
Significant
Good & tested *
Good *
* Successful DVP implementation and introduction of SBL as part of G30 compliance
STRATEGIC INITIATIVES
MSCI UPGRADE26
www.dfm.ae
Delivery Vs.
Payment : Implementation
UNCHANGED
1. T+2 settlement
cycle;
2. Pre-validation of
sell orders will be
maintained.
This means a
seller’s agent
trading account
with local
custodian must
have securities
balances for pre-
validation before a
sell order can
become a valid
order.
CHANGED
1. Permitting Local Custodians ability to reject cash and securities settlement of sell
trades back to executing Broker for settlement if Local Custodians do not receive
(matched) settlement instructions from clients – Local Custodians now have full
control of assets [unnecessary to operate dual accounts].
2. Enhancing current rejection process for settlement of purchase trades;
3. Introduction of a Late Confirmation Period of T+4
4. Securities fails handling mechanisms which comprises:
a. Optional buy-in [between T+2 and T+3]
b. Mandatory buy-in by DFM on T+4.
c. Cash close out against the Local Custodian client [if mandatory buy-in against
selling Broker by DFM fails on T+4].
5. Penalties for Late Confirmation.
1. Reduce risk in Local Brokers having unlimited access to the Local Custodian Client Agent Trading Account.
2. Eliminate the requirement to use a dual account structure.
3. Progression in meeting international best practices under a pre-validation of sale market infrastructure.
4. Facilitate the achievement of Emerging Market status under the MSCI market classification.
DvP
methodology has been
successfully implemented at DFM as of
May 2011
STRATEGIC INITIATIVES
G-30 COMPLIANCE27
www.dfm.ae
New organizational
structure
DFM
DSX ND
Fin
an
cia
l Se
rvic
es
Bu
sine
ss D
ev
elo
pm
en
t
CSD
EXCHANGES
• Trading Enhancements
• Margin Trading
• Equity Swaps
• Warrants
•Enhanced Brokerage Services
• iVESTOR
Cards
• Dividend
Distribution
• Market Data
Feed
• Web
Advertizing
• Online
Subscription
• IPO
initiatives
• e-Reports &
e-Services
• DVP
• SBL
• In-house IPO
System
STRATEGIC INITIATIVES
ORGANIZATIONAL RESTRUCTURING28
www.dfm.ae
DFM has
commissioned Independent
Research
Consultants for
intensive IPO
study
Tap into the IPO market and
research over 500 companies in the
UAE
Indentify the top 100 companies in prime position of
going public
Develop a targeted IPO marketing campaign in 2010-2011
• Rectifying inconsistencies in the IPO market
• Provide IPO outlook for DFM „s shareholders
• Publication of the „Guide to going public‟
• Event hosted by DFM for the launch of the
“Guide to going public” for top financial &
legal advisors
• IPO Market Study and meetings arranged with
potential IPO candidates (E&Y)
• DFM hosted high profile IPO information
workshop for private, semi-government and
family owned businesses
• Approach the Free Zones in the Northern
Emirates
• Initiate talks with the DED & JAFZA
• Initiate talks via the Dubai Chamber of
Commerce
• Nasdaq Dubai Initiative- Regional IPO Market
Study and meetings to be arranged with
potential IPO candidates.
The following initiatives have been taken so far:
The following initiatives are currently planned:
STRATEGIC INITIATIVES
PIONEERING IPO STUDY29
www.dfm.ae
In-depth market intelligence and
value added services
Investor and consumer visibility
One of the most liquid markets in
the G.C.C.
Free accessibility of international
investors
In-depth IR and trading analysis
Robust and reliable trading
environment
STRATEGIC INITIATIVES ROBUST ENVIRONMENT
FOR FUTURE LISTINGS30
www.dfm.ae
Racha Al ChamutManager, Investor Relations
P.O.Box: 9700, Dubai, UAE Tel: +971 4 305 5650Fax: +971 4 331 [email protected]
Areej Al SaeedOffice ManagerExecutive Chairman's Office
P.O.Box: 9700, Dubai, UAE Tel: +971 4 305 5607 Fax: +971 4 331 [email protected]
CONTACTS :
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