D U B A I F I N A N C I A L M A R K E T. HSBC MENA Business Leader Equity Investor Forum

Transcription

1 D U B A I F I N A N C I A L M A R K E T HSBC MENA Business Leader Equity Investor Forum Dubai - October

2 Contents 1. UAE Financial Sector Vision and Strategy 2. UAE Capital Markets 3. Dubai Financial Market The Region s Leading Exchange 4. Performance of Dubai Financial Market PJSC 5. NASDAQ Dubai Acquisition 6. Strategy for Growth 2

3 Dubai 1. Dubai Financial Sector Vision and Strategy 3

4 Dubai s Diversified Economy Dubai s Diversified Economy Oil /Gas as % of GDP (2009) Dubai GDP Share Breakdown by Economic Sectors Qatar 61% Government Sector 3.45% Other 3.36% Financial Sector 8.39% Manufacturing 21.14% Abu Dhabi Saudi Arabia 43% 41% Real Estate & Construction 19.43% Oman 41% Bahrain Dubai 5% 21% Transport 7.06% Hotel & Restaurants 2.39% Trade 34.78% Oil has played a progressively diminishing role in Dubai s economy as compared to other sectors Source: Dubai Chamber of Commerce 4

5 Growth Vision of Financial Sector a new engine of growth Financial services Tourism Trade Globally faster growing sectors Oil and gas Professional services Future global growth (%pa) Globally slower growing sectors Very weak Agriculture Manufacturing Communication Electricity/ Water Transportation and storage Average Dubai s strength by international standards Construction Government services Strong Average global GDP growth Source:Dubai 2015 Plan $ 3B Dubai sectorial GDP 2005 Sectors qualified to be part of future growth path 5

6 Financial Sector Vision and Strategy Vision Well diversified economy based on international trade, banking and finance, information technology and real estate World s fastest growing financial hub Leading emerging market exchange to service the region Connector of liquidity pool Bridging the gap between existing financial centers of London, New York, Hong Kong and Tokyo Shaping tomorrow as a global gateway for capital and investment Strategy Active player in regional and international consolidation Sound financial management Enhancement of transparency in financial systems Adoption of culture of excellence and corporate governance 6

7 Strategic Partnerships with Leading Global Markets 7

8 The Leading Financial Center in the Region Dubai is ranked the 9 th leading center in the world outside America and Europe, maintaining its status as the leading financial center in the region, between Taipei and Melbourne Dubai is ranked 2 nd in the top 4 Global Contenders financial centers that may become significantly more important over the next two to three years (Beijing, Dubai, Moscow and Shanghai) Profile of Asian Centers Broad & Deep Relatively Broad Relatively Deep Emerging Global Global Leaders Hong Kong Singapore Global Diversified - Global Specialists - Global Contenders Beijing Dubai Shanghai Source: Global Financial Centre Index March

9 Key Focus of Financial Strategy - Dubai Government To achieve financial stability by reaching a public debt ratio in line with internationally accepted ratios To continue to meet spending needs for government investments in the future and other financial commitments To rationalize and increase the efficiency of government investment spending through a comprehensive and in-depth study of the infrastructure projects To develop the structure of governmental revenues and expand the revenue base with consideration of the Emirate s competitiveness Source: Department of Economic Development Dubai Government

10 Key Drivers of Economic Growth Good management of debt issues Develop and restructure the financial sector/ banks and financial markets Less focus on the real estate sector/ concentration on different sectors of Dubai s GDP International Economic Developments Development of international trade and direct foreign investments Consumer Spending Private Investment Spending Economic growth Economic Policies Source: Department of Economic Development Dubai Government 10

11 2. UAE Capital Markets 11

12 UAE Capital Market Structure Securities & Commodities Authority Dubai Financial Market Dubai Gold and Commodities Exchange Abu Dhabi Securities Exchange 12

13 DIFC Exchanges Dubai Financial Services Authority The Dubai Financial Services Authority (DFSA) is the sole independent regulator of all financial and ancillary services conducted through the Dubai International Financial Centre (DIFC), a purpose-built free zone in Dubai. NASDAQ Dubai Dubai Mercantile Exchange 13

14 3. Dubai Financial Market The Region s Leading Exchange 14

15 DFM Continues to Rank High for Trading Volume in the GCC YTD 2010 Billion Shares KSE DFM TADAWUL ADX MSM QE BSE 15

16 GCC Markets Indices ADX BSE QE DFM KSE MSM TADAWUL Jan Feb Mar Apr May Jun Jul Aug Source: Reuters 16

17 DFM Trading Velocity Aug-10 Regional Velocity DFM Turnover Velocity (%) 70% 60% 62.3% 112% 128% 50% 40% 30% 41.3% 41.2% 98% 76% 81% 20% 17.8% 15.7% 12.5% 10% 0% 1.9% 28% % * Turnover velocity is defined as the ratio of Annual Traded Value to Market Capitalization 17

18 Increased Institutional Investor Inflow Trade Activity By Sector YTD 2010 Trading Activities By Category (Retail Vs. Institutional %) 2% Retail Institutions 2% 11% 5% 14% Banks Financial Services 14% 15% 24% 28% 21% 22% Real Estate and Construction Telecommunicatiion Transportation 86% 85% 76% 72% 79% 78% 66% Others * * Includes Materials / Insurance / Utilities / Consumer Staples

19 Growth in Foreign Investment Trading Activities ( UAE vs. Non- UAE) (%) Trading Activities Non- UAE (%) 23% 32% 32% 36% 40% 44% 12% 15% 5% 18% 12% 77% 68% 68% 64% 60% 56% 3% 10% 17% 12% 14% 22% 23% 9% 9% 6% 5% 6% 6% UAE Non-UAE GCC Arab Others 19

20 Foreign Ownership Foreign Ownership as percentage of Market Capitalization 10.41% 10.02% 13.12% 11.73% 12.23% 8.34%

21 An Attractive Platform for International Investors DFM is accessible to all international investors 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 21

22 4. Performance of Dubai Financial Market PJSC 22

23 Regional Stock Market Capitalization Regional Market Capitalization Share At Peak in 2007 & Current 2007 Aug-10 9% 13% 8% 15% 10% 10% 16% 47% 17% 2% 2% 2% 3% 46% QE TADAWUL MSM BSE KSE ADX DFM Source: Arab Monetary Fund 23

24 Steady Revenue Streams Revenue Breakdown (%) Total Revenue (USD M)

25 DFM Share Price DFM Share Price (AED)

26 5. Acquisition of NASDAQ Dubai 26

27 Structural and Operational Changes Two Exchanges One Market New Proposed Corporate Structure Operational Changes 19.9% 20% Free float - public 79.62% 1% 19.38% 100% Consolidation of back office functions: Trading Clearing Custody Seamless trading experience: Trading on either exchange will have the same look and feel Expected to increase volumes Carefully designed changes to benefit brokers and other market participants. 27

28 Details of the Transaction The Deal: The transaction due from DFM is US$ 121 Million The New Structure: DFM will restructure and establish a new holding company to satisfy the regulatory framework of DFSA* and the UAE s SCA*: This holding company would wholly own both DFM and NASDAQ Dubai, which would continue to operate as two distinct markets. The two exchanges will work in harmony within their different regulatory frameworks. * DFSA - Dubai Financial Services Authority, SCA - Securities and Commodities Authority 28

29 Two Exchanges One Market Dubai Capital Market from 2010 Consolidated Clearing International & Regional Regulatory Strengths Single Trading System Large choice of Listed Companies Consolidated Custody Bonds Stocks EFTs Derivatives Sukuks Equities 29

30 Wider Choice of Regulatory Framework for Listing and Trading Listing Options DFM : New Capital NASDAQ Dubai : Exit Strategy Regulator Minimum free float UAE Securities & Commodities Authority (SCA) 55% 25% Dubai Financial Services Authority (DFSA) Size Paid up capital: DFM - USD7m Market Cap: USD 50m Ownership 51% U.A.E. required 100% Foreign allowed Valuation approval Share price Securities & Commodities Authority (SCA) SCA Regulator decides whether share price will be made through book building or will be a fixed price Independent Evaluation Market Driven Valuation Issuer can decide whether they want book building or to set a fixed price Share denomination AED USD Founding shareholder lock-in period Published accounts 2 years 6 months expected 2 years 3 years Documents language Arabic English

31 6. Strategy for Growth A. Corporate Re-structuring B. Resurrection of IPOs 31

32 Key Milestones of DFM Growth 5 Securities listed First construction company to list and launch of DFM General Index Fast growth, market capitalization +208% year on year First exchange to go public in the region and first Shariah compliant exchange Best Exchange for Investor Relations - MEIRS Award Two Exchanges, One Market & Inauguration of DFM on 26 th March 2000 with 10 listings Launch of DFM Student Stock Game and E-Reporting Services +60% growth in listings. First telecommunic ations listing New DFM organizational structure including IR department Technological advancements with X Stream and SMARTS DFM acquisition of NASDAQ Dubai 32

33 Shaping the Business Areas for Growth Dubai Financial Market Markets Clearing, Settlement & Depository Financial Services P o t e n t i a l R e v e n u e S t r e a m s - Transaction Fees - Issuer services - Brokerage services - Market data services - Clearing Margins - Clearing & Settlement Fees - Corporate Action Services - Brokerage membership fees - Registrar transfer & mortgage Fees - Custody Fees - Securities Financing - Credit Facilities -Registrar services -ESOP management - Dividend Distribution & Services - IPO & Rights Issue Services 33

34 Pioneering IPO Study DFM has commissioned Independent Research Consultants on an intensive IPO study to: Tap into the IPO market and research over 500 companies in the UAE Results will be used to Develop a targeted IPO marketing campaign in Rectifying inconsistencies in the IPO market Identify the top 100 companies in prime position of going public Provide IPO outlook for DFM s shareholders 34

35 Thank You 35

36 Contacts Areej Alabdullah Executive Management Office P.O. Box: 9700, Dubai, UAE Tel: Fax: aalabdullah@dfm.ae Areej Al Saeed Office Manager Managing Director & CEO s Office P.O. Box: 9700, Dubai, UAE Tel: Fax: aalsaeed@dfm.ae 36