UAE Finalises Stock Market Launch

By Martin, Josh | The Middle East, September 1999 | Go to article overview

UAE Finalises Stock Market Launch


Martin, Josh, The Middle East


The UAE is about to lose its dubious distinction of being the only GCC country without a formal stock exchange. After almost seven years of review, the federal government is putting the final touches on legislation to create a formal national stock market

The United Arab Emirates plans to launch a stock exchange within the next year, raising the number of equity markets operating in the Gulf to seven. The decision marks a policy shift for the Emirates, which had, as recently as three years ago, planned to favour development of an off-shore banking sector. The shift reflects the growing public support for formalised share trading, and the importance such a market could play in the UAE's claim to be the financial as well as transport hub of the Gulf.

The market, expected to be up and running by the first quarter of the year 2000, will take over from an unregulated informal market which has existed since the early 1970s. It will consist of 36 companies with a market capitalisation of around $27 billion larger than all other Gulf markets except that of Saudi Arabia.

The move to formalise the market represents a shift in government policy, which had until recently been favouring the development of off-shore banking. "The increase in the number of companies in the UAE, and the increase in the number of equities being unofficially traded has prompted the government to move first on a stock exchange," says Ahmed Al-Banna, assistant director general of the Dubai Chamber of Commerce and Industry. "It's a means of regulating the securities industry, preventing excessive speculation."

The Emirates Stock Exchange is expected to be an electronic 'floor-less' market. Government planners have concluded that the UAE has the high-tech infrastructure and a well-educated, young, indigenous population well versed in and attuned to the technology involved. Moreover, an electronic bourse could be operated from anywhere, obviating the need for physical trading floors in different parts of the country and the political tussles that would go with it.

Government officials studied electronic exchanges in India, Sri Lanka, Singapore, Turkey and elsewhere, paying particular attention to the Over-the-Counter Exchange of India (OTCEI), NASDAQ (USA) and Tradepoint (UK) as examples of institutions and systems to emulate. Officials concluded, too, that leading international accounting and consultancy firms in the UAE are well geared to give advice on systems, controls and procedures.

"Being the last GCC country to set up a stock exchange has its pluses," notes Suresh Kumar, general manager of Emirates Merchant Bank Limited. "The UAE can avoid the mistakes and the mishaps of other states including the so called Souq Al-Manakh syndrome."

Several thorny issues are still unresolved: setting stricter licensing requirements for brokers (whose numbers grew from four to 16 last year, in addition to some 50 unlicensed traders), determining what kinds of instruments (stocks, bonds, derivatives) will be traded, and determining what, if any, role foreign, non-Arab investors can play.

"There is no question about allowing foreign capital in," notes Mohammed El-Arian, head of emerging markets economic research in the European operations of the Salomon Smith Barney investment bank. "The big issue is what economic and market systems will be put in place."

Initially, the only way foreign, non-Arab investors will participate is through mutual funds (the first of which was set up last year). This was the case in Bahrain and Oman, and is still in Kuwait and Saudi Arabia.

Like the stock markets in neighbouring Arab countries, shares listed on the UAE exchange are likely to be dominated by banks, trading companies, and housing and construction firms. The banking sector alone represents close to 50 per cent of the market capital in the current unofficial exchange.

These companies are dwarfed by the major state-owned entities which many would like to see wholly or partially privatised through equity offerings.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

UAE Finalises Stock Market Launch
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.