Dubai Financial Market. Borse Dubai International Investor Conference November New York

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Morgan Moody
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1 Dubai Financial Market Borse Dubai International Investor Conference November New York 1

2 Contents 1. Dubai Overview Dubai s Financial Sector UAE Capital Markets Dubai Financial Market - The Exchange Dubai Financial Market - The Company Overcoming the Global Crisis Q & A Contacts 38 2

3 1. Dubai Overview 3

4 Resilient Economy Dubai is a strategically located international trading hub with some of the world s best air and sea ports serving over 205 destinations Demographics: young, fast growing native populations; Market orientated economy with non-restricted access to real assets and financial markets Safe haven: attracting capitals and elites from neighboring countries Dubai companies becoming multi-nationals (Emaar, ENBD ( Emirates National Bank of Dubai), Emirates Airlines 4

5 Diversified Economy Dubai Nominal GDP (USD Billion) Dubai 2008 GDP Breakdown (%) 16.9 % CAGR GDP Per Capita (000 USD) Oil has played a progressively diminishing role in Dubai s economy as compared to other sectors Source: Dubai Statistics Centre

6 Growth Vision Financial services Tourism Globally fast growing industries with a strong position in Dubai Trade Globally faster growing sectors Oil and gas Professional services Future global growth (%pa) Manufacturing Communication Electricity/ Water Transportation and storage Construction Average global GDP growth Globally slower growing sectors Agriculture Government services Very weak Average Dubai s strength by international standards Strong $ 3B Dubai sectorial GDP 2005 Sectors qualified to be part of future growth path 6 Source: Dubai 2015 Plan

7 2. Dubai s Financial Sector 7

8 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 Strategy 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 Active player in regional and international consolidation 8

9 Dubai Capital Market Expansion Comments Public Borse Dubai Borse Dubai has 3 main shareholders : 20% DFM 80% 19.99% NASDAQ-OMX LSE 20% ICD (Investment Corporation of Dubai): 60% DIFCI (Dubai International Financial Center Investments): 20% 66.7% 33.3% DFG (Dubai Financial Group): 20% NASDAQ-DUBAI 9

10 The Leading Financial Centre in the Region Dubai is ranked the 5th leading centre in the world outside America and Europe, maintaining its status as the leading financial centre in the region between Singapore at one end and Sydney at the other Dubai ranked #1 in the list of top 5 financial centers that might become significantly more important over the next two to three years Dubai is the clear leader in perceptions of potential growth as a financial centre c 10 Source: Global Financial Centre Index March 2009

11 3. 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 Dubai Free Zone Exchanges Dubai Financial Services Authority A purpose built free zone regulator, which is independent of all financial and ancillary services conducted through the Dubai International Financial Center (DIFC) NASDAQ Dubai Dubai Mercantile Exchange 13

14 Regulatory Developments Federal Regulatory Developments (completed) Companies Law - Reduction of minimum floatation from 55% to 30% for family businesses Capital Markets Regulations - GCC citizens are treated as UAE nationals (expected) Companies Law - Based on their article of association companies are open for 100% ownership - Reduction of minimum floatation from 55% to 30% for all businesses ESCA Regulatory Developments Margin Trading Brokers training phase Corporate Governance Guidelines - All listed companies should implement the guidelines by April 2010 Testing brokers qualification by the SII (Securities and investment authority) approved Custodians - to be approved Capital Adequacy - to be approved ETF - drafted Analyst Licensing - drafted 14

15 4. Dubai Financial Market - The Exchange 15

16 DFM Ranks Second for Trading Volume in the GCC 2008 Billion Shares Q Billion Shares 16

17 Highest Index Growth Amongst GCC Markets DFM General Index 17

18 DFM Trading Value (USD Billion) 18

19 DFM Trading Velocity DFM Turnover velocity (%) expected * Turnover velocity is defined as the ratio of Annual Traded Value to Market Capitalization 19

20 Increased Institutional Investor Inflow 2008 Trading Activities by Sector Trading Activities By Category (Retail Vs. Institutional)(%) Q3 YTD 2009 Foreigners (non-gcc and non- Arab) were net buyers of DFMlisted securities in the period. 20

21 Growth in Foreign Investment Trading Activities (UAE vs. Non- UAE) (%) Trading Activities Non- UAE (%) 37% 31% 30% 22% 11% * Non-UAE trading activities increased to 40% YTD 09 21

22 60% of Foreign Ownership is Institutional Foreign Ownership as percentage of Market Capitalization ($ Billion) Foreign Ownership Retail vs. Institutional (%) % of Total Market Cap *Foreign ownership averaged 11% YTD 09 *Institutional investments averaged 60% YTD 09 Note (1): As can be observed from the combination of both graphs, the Other foreign investors are mostly international institutions Note (2): The term GCC under Foreign implies non UAE GCC investors 22

23 Why International Investors Trade on DFM? 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 23

24 Company Listings on DFM New Listings : Listing of Drake & Scull International 24

25 Why is DFM Attractive for Listings? Free accessibility of international investors No listing fees Investor and consumer visibility In-depth market intelligence and value added services Robust and reliable trading environment In-depth IR and trading analysis One of the most liquid markets in the GCC 25

26 Innovative Trading Capabilities NASDAQ OMX-X-Stream launched at the end of October 2009: Trading system 1. Huge excess capacity with NASDAQ OMX X-Stream (executes more than 720,000 orders per session) 2. Reliability and fault tolerance 3. High performance 4. Scalability and functional depth provides virtually unlimited growth The ability to integrate new business functions allows the trading system to evolve quickly and effectively in response to competitive and regulatory pressures. Continuous, order-driven, fully automated trading system Integrated with depository system, enabling validation of sell orders against depository inventory prior to trading Transparent, automated and cost-effective information dissemination 26

27 Innovative Operational Capabilities T+2 rolling settlement with multilateral netting Clearing, settlement and depository Same-day turnarounds (back-to-back transactions) Corporate actions (cash dividends, stock splits, bonus issues, etc.) Undertaking an operational review to ensure compliance with G30 recommendation Voice recognition system Adopting the DVP model in support of international investors Offering settlement facilities (securities borrowing, lending and buy-in) Trades once executed are final and irrevocable Risk management Trading limits for market participants commensurate with posted collateral Immediate suspension of trading for defaulting brokers Established business continuity and contingency plans 27

28 5. Dubai Financial Market - The Company 28

29 DFM Market Capitalization Doubled in 09 * DFM market cap doubled in 09 as compared to 08 29

30 Strong Financial Performance Q2 09 Q Q1/Q2 % change Total Revenue $ 45 million +75% Net Income $ 35 million +119% Total Operating Expenses $ 10 million Stable cost base Diluted EPS $ *Conversion of the 2009 interim dividend from AED into USD is based upon an exchange rate of US$1:AED 3.67, being the Central Bank of UAE spot rate as at midday, October 25,

31 Steady Revenue Streams Revenue Breakdown (%) Other Membership Investment Revenue Clearing Fees Trading Fees Total Revenue (USD M) Total Revenue (USD M)

32 Steady Growth of DFM Share Price DFM Share Price (AED) 32

33 6. Overcoming the Global Crisis 33

34 Well-Positioned to Buffer the Crisis Due to a Strong Business Model 34

35 DFM s Business Strategy Prioritizing cash equity market development Actively targeting potential IPO s ranging from governmental entities, semi-governmental and private companies through market research Focusing on attracting institutional investors and becoming a member of major global and/or emerging market indices Increasing awareness and access of regional retail investors and, in the long term pursuing regional and local institutional investors Enhancing information services to support participants use of market data 35

36 The worst is behind us and we will be amongst the fastest recovering economies. Sheikh Mohammed Bin Rashid Al Maktoum Vice President of UAE, Prime Minister and Ruler of Dubai Stimulus measures have proved their effectiveness and the UAE GDP is forecasted to record 2.4% growth in The growth rate is expected to reach 5.2% in International Monetary Fund 36

37 7. Q & A 37

38 8. Contacts Racha El Hassan Manager Investor Relations Market Development P.O.Box: 9700, Dubai, UAE, Tel: , Fax: , relhassan@dfm.ae Areej Al Saeed Office Manager Executive Chairman's Office P.O.Box: 9700, Dubai, UAE, Tel: , Fax: , aalsaeed@dfm.ae 38

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