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Dubai Financial Market
Investor Presentation 2012
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
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www.dfm.ae
THE REGION – MENASA / GCC/ UAE
AN ECONOMIC POWERHOUSE
SOLID ECONOMIC FUNDAMENTALS
-PROMISING GROWTH
Oil Reserves and Production (% of Global Total)
1.7%
2,050
MENASA
1,750
2007
2008
2009
2010
Population
2011
2012 e 2013 f
Iran
Growth (%)
7% of global GDP
8,000,000
6,000,000
15.0%
5,000,000
10.0%
4,000,000
3,000,000
5.0%
2,000,000
0.0%
1,000,000
0
2006
2007
2008
2009
GDP
2010
2011 2012 e 2013 f
Growth (%)
8%
10%
8%
South
America
Europe
Oil Production
FDI Projections 2006 - 2013
7,000,000
20.0%
North
America
Oil Reserves
GDP 2012 (USD Millions)
25.0%
MENA
5.0%
200,000
4.0%
150,000
3.0%
Millions
2006
9%
1,800
1.5%
15%
1,850
15%
1,900
1.5%
29%
59%
1,950
45%
2,000
1.6%
-5.0%
Source:
IMF, World Bank
2,100
1.6%
Millions
MENASA region
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
2,150
29% of Global Population
Millions
Population Projections
33%
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MENASA REGION :
100,000
2.0%
50,000
1.0%
0.0%
0
2006
2007
2008
2009
FDI
2010
2011 2012 e 2013 f
% of GDP
www.dfm.ae
3
GCC REGION :
LIQUIDITY ON THE BACK OF HIGH OIL PRICES –
KEY EMERGING MARKET
The UAE, the second biggest Arab economy, is set to record 4% growth in GDP in 2013, led by a focus on adopting industrial
policies that will drive sustainable development across the UAE.
-IMF 2013 Forecast
GCC – GDP Projections 2010 - 2013
Region was
able to
quickly
recover from
the global
crisis on the
back of
strong
fundamentals
and high oil
prices
GCC – Country Ratings 2011-12
Country
2010
2011
2012 e
2013 f
Country
S&P
Moody's
Fitch
Bahrain
4.1%
1.5%
3.6%
4.8%
Bahrain
BBB
Baa1
BBB
Kuwait
3.4%
5.7%
4.5%
5.1%
Kuwait
AA
Aa2
AA
Oman
4.1%
4.4%
3.6%
3.8%
Oman
A
A1
A
Qatar
16.6%
18.7%
6.0%
Qatar
AA
Aa2
AA-
Saudi Arabia
4.1%
6.8%
3.6%
4.3%
Iran
4.4%
Saudi Arabia
AA-
Aa3
AA-
UAE
3.2%
3.3%
3.8%
4.0%
UAE
AA
Aa2
AA-
GCC Ranking 2011-12
GCC – FDI Share by Country 2011-12
GCC region rated most promising region under WEF &
World Bank rating
GCC region accounted for US $ 70 Bn of FDI funds inflow
Kuwait
1%
Oman
5%
25th 30th
26th 39th
32nd 80th
36th 99th
GCC
Euro Area
South Asia
MENA
Competitiveness
Source: IMF, World Bank
Ease of Doing Business
Qatar
13%
Bahrain
2%
UAE
17%
Saudi Arabia
62%
www.dfm.ae
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UAE:
GROWTH PROSPECTS
Key Contributors
to Growth
Oil / Gas as % of GDP (2012)
•
Recovery in oil prices
•
Strong growth in the non-hydrocarbon sector
•
UAE’s service driven economy benefitting from
the global trade
OMAN
41%
SAUDI ARABIA
41%
USD 50 billion worth of infrastructural projects still
under construction in UAE
•
21%
BAHRAIN
45%
UAE
61%
QATAR
35.9
UAE Import/Export Projections
(% Growth)
Exports
2005
2006
Source: Dubai Chamber of Commerce
2007
2008
2009
-1.5
6.1
5.0
6.8
9.8
10.5
-4.2
-8.9
-1.9
9.2
12.6
12.8
11.2
8.3
10.4
14.4
22.4
Imports
2010
2011
2012 (f)
2013 (f)
www.dfm.ae
DUBAI
THE FINANCIAL HUB OF MIDDLE EAST
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DUBAI:
VISION & ECONOMIC STRENGTHS
“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
Dubai’s core
strengths remain
fundamentally
sound
Dubai GDP Share Breakdown by
Economic Sectors – 2011
Government
Sector
5.2%
Others
5.6%
Manufacturing
13.2%
Financial Sector
10.6%
Real Estate &
Construction
19.9%
Ruler of Dubai
Well diversified economy based on
international trade, banking and
finance, tourism, information
technology and infrastructure.
Trade
28.7%
Transport
13.0%
Hotel &
Restaurants
3.7%
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 25th 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 2012, benefitting both tourism
and trade activities.
- DSC, 2012 Report
Source : Dubai Chamber of Commerce
www.dfm.ae
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DUBAI:
RECENT EVENTS
Seems like the
stars are aligning
for Dubai once
again
•
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
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.
www.dfm.ae
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DUBAI:
GROWTH PROSPECTS
Financial
services
Globally fast growing industries
with a strong position in Dubai
Tourism
Trade
Globally faster
growing sectors
Oil and gas
Professional
services
Communication
Future global
growth
2010– 2015
Transportation
and storage
Manufacturing
Average global
GDP growth
Construction
Electricity/
Water
Globally slower
growing sectors
Agriculture
Very weak
Government
services
Average
Strong
Dubai’s strength by international standards
Sectors qualified
to be part of
future
growth path
Source : DSP 2015
www.dfm.ae
CAPITAL MARKETS
UNITED ARAB EMIRATES
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CAPITAL MARKETS:
KEY EXCHANGES IN THE REGION
Casablanca
Stock Exchange
Algiers Stock
Exchange
Istanbul Stock
Exchange
Tunis Stock
Exchange
Damascus Stock
Exchange
Beirut Stock Exchange
Palestine Stock Exchange
Libya Stock
Exchange
Egypt Stock
Exchange
Iraq Stock
Exchange
Amman Stock
Exchange
Tadawul
Tehran Stock
Kuwait Stock Exchange
Exchange
Qatar
Exchange
Karachi Stock
Exchange
Muscat Stock
Market
Sudan Stock
Exchange
Only UAE offer a wide array of trade exchanges/products in
the entire MENA region
Cash & Fixed
Income Equity,
Index &
Commodity
Futures
www.dfm.ae
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MARKET CAPITALIZATION
LIQUIDITY REVIEW
END-OF-PERIOD MARKET CAPITALIZATION
(2001 –2012)
DFM / ND Breakdown - 2012
USD Billion
DFM / ND Markets
Breakdown
(USD Bn)
Source : DFM/ND Analytics
www.dfm.ae
12
TRADE VALUES :
DFM PERFORMANCE
Trading
volumes have
picked up in
2012 with 2012
recording a
growth of 52%
over 2011.
Source : DFM/ND Analytics
TRADED VALUE - DFM
(2001 – 2012 )
www.dfm.ae
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MARKET VELOCITY
DFM PERFORMANCE
VELOCITY
(2001 – 2012)
Source : DFM Analytics
www.dfm.ae
DFM / NASDAQ DUBAI
TWO EXCHANGES, ONE MARKET
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UAE MARKETS :
REGULATIONS & OWNERSHIP
Regulatory
Authorities
SCA
(UAE Regulations)
DFSA
(International Regulations)
ADX
DFM
NASDAQ Dubai
Stock Exchanges
Ownership
Structure
Government
of
ABU DHABI
79.62%
19.9%
100%
33.33%
1%
66.67%
19.38%
Public
Stake
www.dfm.ae
YTD PERFORMANCE
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DFM : GENERAL INDEX
1622.53
1700
31/12/2012
17/12/2012
03/12/2012
19/11/2012
05/11/2012
22/10/2012
08/10/2012
24/09/2012
10/09/2012
27/08/2012
13/08/2012
30/07/2012
16/07/2012
02/07/2012
18/06/2012
04/06/2012
21/05/2012
07/05/2012
23/04/2012
09/04/2012
26/03/2012
12/03/2012
27/02/2012
13/02/2012
30/01/2012
16/01/2012
02/01/2012
www.dfm.ae
Source : Reuters / DFM / ND Analytics
-- 2012
-- 2011
INDEX PERFORMANCE
1800
19.9% Index
growth in 2012
as compared
to 2011
1600
1500
1400
1300
1200
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DFM : TRADING PROFILES
RETAIL VS. INSTITUTIONAL MIX
2012 – TRADING ACTIVITY PATTERN
AVERAGE RETAIL TRADING = 75.47%
Trading
Activity : Client
type Mix
73.00%
75.47%
2010
2011
2012
RETAIL
Source : Reuters / DFM / ND Analytics
24.53%
77.60%
2008
22.40%
20.90%
29.30%
2009
70.70%
22.40%
2007
79.10%
2006
77.60%
14.60%
85.40%
2012 has been a
stabilizing year
with institutional
investor trading
averaging to
24.5%. Key
reasons and
major setback is
attributed to
MSCI upgrade
which is still
pending
27.00%
AVERAGE INSTITUTIONAL TRADING = 24.53%
TRADING ACTIVITY BY CATEGORY
INSTITUTIONAL
www.dfm.ae
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DFM : TRADING ACTIVITY
LOCAL VS. FOREIGN INVESTMENT
UAE VS. NON
UAE
TRADING
ACTIVITY
31%
30%
69%
70%
2006
2007
37%
40%
44%
48%
46%
63%
60%
56%
52%
54%
2008
2009
UAE
5%
12%
NON UAE
TRADING
ACTIVITY
2011
2012
Non-UAE
12%
15%
22%
23%
18%
20%
15%
17%
12%
9%
2006
14%
22%
25%
6%
5%
6%
6%
6%
6%
2007
2008
2009
2010
2011
2012
GCC
Source : Reuters / DFM / ND Analytics
2010
OTHER ARABS
OTHERS
www.dfm.ae
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DFM : TRADE MATRICES
SECTOR MIX
9.66%
Trade Activity
– By Sector
2012
7.11%
10.58%
Telecom
Financial Services
Banking
12.72%
Insurance
Services
Others
2.33%
55.30%
2.19%
Industrial
Real Estate
Transportation
0.11%
0.01%
* Includes Materials / Utilities / Consumer Staples
Source : Reuters / DFM / ND Analytics
www.dfm.ae
20
DFM : OWNERSHIP
SHARE OWNERSHIP RATIOS
BY TYPE OF INVESTOR
BY NATIONALITY
3.13% 4.93%
5.73%
Distribution of
Share
Ownership
2012
33%
ARAB
RETAIL
GCC
INSTITUTIONAL
OTHERS
67%
UAE
86.21%
FOREIGN OWNERSHIP AS % OF MARKET CAPITALIZATION
10%
2006
13%
12%
12%
11%
12%
2009
2010
2011
2012
8%
2007
2008
Foreign Ownership
Source : Reuters / DFM / ND Analytics
www.dfm.ae
2/1/2012
9/1/2012
16/01/2012
23/01/2012
30/01/2012
6/2/2012
13/02/2012
20/02/2012
27/02/2012
5/3/2012
12/3/2012
19/03/2012
26/03/2012
2/4/2012
9/4/2012
16/04/2012
23/04/2012
30/04/2012
7/5/2012
14/05/2012
21/05/2012
28/05/2012
4/6/2012
11/6/2012
19/06/2012
26/06/2012
3/7/2012
10/7/2012
17/07/2012
24/07/2012
31/07/2012
7/8/2012
14/08/2012
26/08/2012
2/9/2012
9/9/2012
16/09/2012
23/09/2012
30/09/2012
7/10/2012
14/10/2012
21/10/2012
30/10/2012
6/11/2012
13/11/2012
21/11/2012
28/11/2012
9/12/2012
16/12/2012
23/12/2012
30/12/2012
21
DFM : MARKET ACTIVITY
DFM SHARE PRICE
AED
1.4
DFM Share
Price
Movement
2012
1.2
AED 1.02
1
0.8
0.6
0.4
Trade
Volume
YTD 2010
0.2
0
Source : Reuters / DFM / ND Analytics
www.dfm.ae
22
DFM :
REVENUE MIX
Revenue
Breakdown
2008-2012
4.8%
6.3%
11.3%
26.4%
18.4%
32.0%
20.8%
28.5%
21.0%
DFM is
actively
moving
towards
revenue
diversification
with 2012
witnessing
42% revenue
from
diversified
portfolio
30.6%
75.3%
63.2%
60.2%
43.0%
2008
2009
Trading Fee & Commisions
Source : Reuters / DFM / ND Analytics
58.2%
2010
2011
Investment Income
2012
Other Income
www.dfm.ae
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DFM : INVESTOR-CENTRIC
ATTRACTIVE PLATFORM FOR LOCAL &
INTERNATIONAL INVESTORS
•
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
www.dfm.ae
CORPORATE STRATEGY
DFM – NASDAQ DUBAI
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STRATEGIC INITIATIVES
ADDRESSING FUTURE GROWTH
•
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
www.dfm.ae
26
STRATEGIC INITIATIVES
MSCI UPGRADE
CRITERIA
Key criteria's for
Emerging
market status
Emerging
DFM / ND
No requirement
Strong economic
fundamentals with
expected GDP
growth of 4% for
2012-13
3
12
i) Company size ( Full market cap )
USD 873 Mn
USD 63 Bn
ii) Security size ( Float market cap )
USD 436 Mn
USD 15.5 Bn
15% ATVR
33.5%
A. ECONOMIC DEVELOPMENT
A.1 Sustainability of economic development
B. SIZE AND LIQUIDITY REQUIREMENTS
DFM is ready
and meets
all eligibitly
criteria's for
MSCI
upgrade to
Emerging
market
status
B.1 Number of companies meeting the following
standard index criteria
iii) Security liquidity
C. MARKET ACCESSIBILITY CRITERIA
49%
C.1 Openness to foreign ownership
Significant
C.2 Ease of capital inflows/outflows
Significant
Significant
Good & tested
Good & tested *
Modest
Good *
C.3 Efficiency of operational framework
C.4 Stability of the institutional framework
* Successful DVP implementation and introduction of SBL as part of G30 compliance
(Current Foreign
Ownership – 12%)
www.dfm.ae
27
STRATEGIC INITIATIVES
G-30 COMPLIANCE
CHANGED
UNCHANGED
Delivery Vs.
Payment :
Implementation
DvP
methodology
has been
successfully
implemented
at DFM as of
2012
1. T+2
cycle;
settlement
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 prevalidation before a
sell
order
can
become a valid
order.
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.
5.
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].
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.
www.dfm.ae
28
STRATEGIC INITIATIVES
ORGANIZATIONAL RESTRUCTURING
DFM
ND
Financial
Services
DSX
Business
Development
New
organizational
structure
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
www.dfm.ae
29
STRATEGIC INITIATIVES
PIONEERING IPO STUDY
DFM
has
commissioned
Independent
Research
Consultants
for
intensive
IPO
study
Tap into the IPO
market and
research over 500
companies in the
UAE
Develop a targeted IPO
marketing campaign in 20102011
• Rectifying inconsistencies in the
IPO market
• Provide IPO outlook for DFM ‘s
shareholders
Indentify the top
100 companies in
prime position of
going public
The following initiatives have been taken
so far:
•
•
•
•
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
The following initiatives are currently
planned:
•
•
•
•
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.
www.dfm.ae
30
STRATEGIC INITIATIVES
ROBUST ENVIRONMENT
FOR FUTURE LISTINGS
In-depth market
intelligence and
value added
services
Robust and
reliable trading
environment
Investor and
consumer visibility
In-depth IR and
trading analysis
One of the most
liquid markets in
the G.C.C.
Free accessibility
of international
investors
www.dfm.ae
ii
CONTACTS :
Racha Al Chamut
Areej Al Saeed
P.O.Box: 9700, Dubai, UAE
Tel: +971 4 305 5650
Fax: +971 4 331 4924
[email protected]
P.O.Box: 9700, Dubai, UAE
Tel: +971 4 305 5607
Fax: +971 4 331 4924
[email protected]
Manager, Investor Relations
Office Manager
Executive Chairman's Office
www.dfm.ae