Dow Jones, DFM launch new index

DUBAI — Dow Jones Indexes and the Dubai Financial Market (DFM) yesterday announced the launch of a co-branded index — Dow Jones DFM Index— that will be commercially operational by September this year.

By Isaac John (Chief Business Reporter)

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Published: Sun 18 Jun 2006, 10:38 AM

Last updated: Thu 16 Nov 2023, 11:33 AM

Designed to serve as a point of reference for investment products, the new index will enable investors to participate in the performance of the Dubai stock market.

Announcing the launch, DFM Director-General Essa Kazim said the conventional index, measuring the performance of the Dubai Financial Market, would follow the transparent and objective methodology of the Dow Jones Global Titans 50 Index and other indexes, including Dow Jones DIFC Arabia Titans 50 Index. The new index will include leading Dubai stocks ranked by free-float market capitalisation, sales, revenue and net income.

This move is expected to provide access to Dubai-quoted stocks for international investors, while also enhancing DFM-listed companies' exposure globally. Dow Jones DFM Index will eventually become part of Dow Jones broader Asian index and will provide international investors exposure to the DFM.

Essa Kazim also hinted at launching a series of indexes that would appeal to retail as well as institutional investors. "Our stated mission is to create a fair, efficient, liquid and transparent marketplace in order to serve all stakeholders and to contribute to the economic growth of the UAE and the region," he said.

Global Director of Dow Jones Islamic Indexes Rushdi Siddiqui said Dow Jones was considering capping the weighting of larger companies to reduce volatility on the exchange. Initially there will be two indexes — a Composite Index and a Titan Index, consisting of blue chips. The Index will be reviewed quarterly. On the recent volatility in the market, Kazim said a reduction of volatility would help lure more institutional investors to the exchange, which is dominated by speculators. "I would estimate that 70 per cent of trading activity is driven by retailers and small investors. Institutional investors will limit the type of fluctuation we have seen." Dow Jones, which has an index in Kuwait, recently launched one for the Egyptian market and another with the Bahrain Stock Exchange.

Meanwhile, following a regular annual review of the Dow Jones DIFC Arabia Titans 50 Index —a regional blue-chip index developed jointly by Dow Jones Indexes and the Dubai International Financial Centre, in collaboration with the Dubai based investment bank Shuaa Capital — there would be changes as trading opens tomorrow. Total free-float market capitalisation of the reconstituted Dow Jones DIFC Arabia Titans 50 Index increased to $280.27 billion from $216.08 billion as of May 31, 2006.

The following 12 components will be added to the Dow Jones DIFC Arabia Titans 50 Index: Etisalat, NBAD, Abu Dhabi Commercial Bank, Dubai Islamic Bank, Emirates Bank International, \Telecom Egypt, NBD, Oman Telecommunications Company, MashreqBank, Attijariwafa Bank (Morocco), Housing Bank (Jordan) and Sudan Telecommunications Company (UAE).

Companies exiting the index include Bank of Kuwait and the Middle East, Commercial International Bank (Egypt), Qatar Electricity & Water, Sultan Centre Food Products (Kuwait), Burgan Bank, Jordan Cement, Kuwait Cement, Arab Potash Company (Jordan), National Bank of Bahrain, Commercial Facilities (Kuwait), National Real Estate (Kuwait) and Bank of Bahrain & Kuwait.

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