• Home
• /
• Business

UAE needs single stock market

In March, Dubai Financial Market executive chairman Essa Kazim said a possible consolidation was being discussed between the owners of the Dubai and Abu Dhabi stock markets.

“I do understand there are discussions and I think it is more likely to happen now,” Shehab Gargash told Khaleej Times on the sidelines of Daman Investments annual briefing late Monday. Merging the two exchanges would create the second-biggest bourse in the Arab world after Saudi Arabia’s Tadawul All Share Index.

Gargash believes single market will make it more liquid market, adding: “I do hope single market will become more liberal and marked-oriented.

He said as long as you have market friendly exchange whether it is one or ten id does not matter. One makes life simple of people related with the market, he added.

The chief executive said market needs some artificial activity on short-term basis to spur the activity to generate liquidity.

Low level of activity has also taken away a lot of international players, he said, adding: “I think there should be a programme for creating sustained activity including pension funds and government funds.”

Lack of institutional support badly hit the bourses in the country and because of that both the bourses are the worst-performing markets among the Gulf markets.

A sharp fall in trading activities also reduced brokerage houses revenues and resultantly they are closing 
down businesses.

“There were 120 [brokers] earlier, today there are around 70 and we expect the numbers to reach between 30 and 35 in the next two to three years,” Gargash said. In November, Daman announced its plan for initial public offering by 2012 with an amount to be raised around Dh300 million.

“We still believe that the market environment will be conducive for an IPO by the end of 2012, should it not be the case, we will be the first to come out and say that it will be a delay and not a cancellation,” the chief executive said. Earlier at the annual briefing, Daman unveiled its report on the UAE economy titled: “The UAE economy at a crossroad.”

The report highlights the set of factors that impact the UAE economy today, and suggests some solutions that may help guide the country as it finds its path back to economic recovery.

The UAE economy is presently at a crossroads that will prove critical to the manner and speed in which it emerges from its present malaise, according to the report.

“There are tough factors to consider, and tough decisions to be made. While the economic miracle that is the UAE is far from dead, the very real economic crisis in which the country finds itself has thrust upon it a set of challenges that will require courage and ingenuity to overcome,” according to the report. — abdulbasit@khaleejtimes.com