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 1 - October 2010 Contents

1. UAE Financial Sector Vision and Strategy

2. UAE Capital Markets

3. – The Region’s Leading Exchange

4. Performance of Dubai Financial Market PJSC

5. NASDAQ Dubai Acquisition

6. Strategy for Growth

2 Dubai

1. Dubai Financial Sector Vision and Strategy

3 Dubai’s Diversified Economy Dubai‟s Diversified Economy

Oil /Gas as % of GDP (2009) Dubai GDP Share Breakdown by Economic Sectors - 2009

Government Sector 3.45% Other 3.36% Manufacturing Financial Qatar 61% 21.14% Sector 8.39%

Real Estate & 43% Abu Dhabi Construction 19.43%

Saudi 41% Arabia

Oman 41%

Transport 7.06% Bahrain 21% Hotel & Trade 34.78% Restaurants Dubai 5% 2.39%

Oil has played a progressively diminishing role in Dubai „s economy as compared to other sectors

Source: Dubai Chamber of Commerce 4 Growth Vision of 2005-15

Financial Sector – a new engine of growth

Financial Tourism services

Trade

Oil and gas Globally faster Professional services growing sectors

Communication Transportation Future global and storage Manufacturing growth 2005– Average global 2015 Construction GDP growth (%pa) Electricity/ Water Agriculture Globally Government slower services growing sectors Very weak Average Strong Dubai‟s strength by international standards

Dubai Sectors qualified to be $ 3B sectorial part of future GDP 2005 growth path 5 Source:Dubai 2015 Plan Financial Sector Vision and Strategy

• Well diversified economy based on international trade, banking and finance, information technology and real estate Vision • 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 Strategic Partnerships with Leading Global Markets

7 The Leading Financial Center in the Region

• Dubai is ranked the 9th 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 2nd 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 Contenders Global Leaders Global Diversified Global Specialists Beijing Global Hong Kong - - Dubai Singapore Shanghai

Source: Global Financial Centre Index March 2010 8

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 2010 9

Key Drivers of Economic Growth

Develop and Less focus on the restructure the Good real estate financial sector/ sector/ management of banks and debt issues concentration on financial different sectors markets of Dubai‟s GDP

International Economic Consumer Spending Economic Policies Developments

Private Investment Spending

Development of international trade and direct foreign investments Economic growth

10 Source: Department of Economic Development – Dubai Government 2. UAE Capital Markets

11 UAE Capital Market Structure

Securities & Commodities Authority

Dubai Financial Market

Dubai Gold and Abu Dhabi Securities Commodities Exchange Exchange

12 DIFC Exchanges

The Dubai Financial Services Dubai Financial Services Authority 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 3. Dubai Financial Market The Region’s Leading Exchange 14 DFM Continues to Rank High for Trading Volume in the GCC

YTD 2010 Billion Shares

60

50

40

30

20

10

0 KSE DFM TADAWUL ADX MSM QE BSE

15 GCC Markets Indices

1200

1150

1100 ADX BSE QE 1050 DFM KSE 1000 MSM TADAWUL

950

900 Jan Feb Mar Apr May Jun Jul Aug

Source: Reuters 16 DFM Trading Velocity

DFM Turnover Velocity (%) Aug-10 Regional Velocity

70% 62.3% 128%

60% 112%

50% 98% 41.3% 41.2% 40% 81% 76% 30%

17.8% 20% 15.7% 12.5% 41% 10% 1.9% 28% 0% 2004 2005 2006 2007 2008 2009 2010

* Turnover velocity is defined as the ratio of Annual Traded Value to 17 Increased Institutional Investor Inflow

Trade Activity – By Sector Trading Activities By Category YTD 2010 (Retail Vs. Institutional %)

Retail Institutions 2% Banks 2% 5% 14% 15% 11% 21% 22% 24% 28% 14% Financial Services

Real Estate and Construction Telecommunicatiion

86% 85% Transportation 79% 78% 76% 72%

66% Others *

* Includes Materials / Insurance / Utilities / Consumer Staples 2005 2006 2007 2008 2009 2010

18 Growth in Foreign Investment

Trading Activities ( UAE vs. Non- UAE) (%) Trading Activities Non- UAE (%)

23% 15% 32% 32% 36% 40% 44% 12%

5% 18% 12% 3% 17% 23% 77% 22% 68% 68% 64% 10% 60% 56% 12% 14%

9% 9% 6% 5% 6% 6%

2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010

UAE Non-UAE GCC Arab Others

19 Foreign Ownership

Foreign Ownership as percentage of Market Capitalization

13.12% 12.23% 11.73% 10.41% 10.02%

8.34%

2005 2006 2007 2008 2009 2010

20 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 4. Performance of Dubai Financial Market PJSC

22 Regional Market Capitalization

Regional Market Capitalization Share

At Peak in 2007 & Current

2007 Aug-10

9% 8% 13% 15% 10%

10%

16%

17% 47%

2% 46% 3% 2% 2%

QE TADAWUL MSM BSE KSE ADX DFM

23 Source: Arab Monetary Fund Steady Revenue Streams

Revenue Breakdown (%)

Total Revenue 310 276 138 (USD M)

24 DFM Share Price

DFM Share Price (AED)

2.2

2

1.8

1.6

1.4

1.2

1

25 5. Acquisition of NASDAQ Dubai

26 Structural and Operational Changes Two Exchanges – One Market

New Proposed Corporate Structure Operational Changes

• Consolidation of back office functions:  Trading  Clearing

 Custody

19

. 9

% 79.62% • Seamless trading experience:  Trading on either exchange will 1% have the same look and feel  Expected to increase volumes 19.38% • Carefully designed changes to 100% benefit brokers and other market 20% Free float - participants. public

27 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 Two Exchanges – One Market

Dubai Capital Market from 2010 Consolidated Clearing

International & Regional Single Trading System Regulatory Strengths

Large choice Consolidated of Listed Custody Companies

Stocks Bonds Derivatives EFTs Sukuks Equities

29 Wider Choice of Regulatory Framework for Listing and Trading

Listing Options DFM : NASDAQ Dubai : New Capital Exit Strategy

Regulator UAE Securities & Commodities Dubai Financial Services Authority (SCA) Authority (DFSA) Minimum free float 55% 25%

Size Paid up capital: Market Cap: USD 50m DFM - USD7m

Ownership 51% U.A.E. required 100% Foreign allowed

Valuation approval Securities & Commodities Independent Evaluation Authority (SCA)

Share price SCA – Regulator decides Market Driven Valuation – whether share price will be Issuer can decide whether made through book they want book building or building or will be a fixed to set a fixed price price

Share denomination AED USD

Founding shareholder 2 years 6 months expected lock-in period

Published accounts 2 years 3 years Documents language Arabic English 6. Strategy for Growth

A. Corporate Re-structuring

B. Resurrection of IPOs

31 Key Milestones of DFM Growth

First construction First exchange to go Fast growth, market Best Exchange 5 Securities company to list and public in the region Two capitalization for Investor listed launch of DFM and first Shariah Exchanges, +208% year on year Relations - One Market General Index compliant exchange MEIRS Award

2000 2001 2002 2003 2004 2005 & 2006 2007 2008 2009 2010

Inauguration of Launch of DFM +60% growth New DFM Technological DFM DFM on 26th Student Stock Game in listings. First organizational advancements acquisition of March 2000 with and E-Reporting telecommunic structure including IR with X Stream NASDAQ 10 listings Services ations listing department and SMARTS Dubai

32 Shaping the Business Areas for Growth

Dubai Financial Market

Clearing, Settlement Financial Markets & Services Depository

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 - Clearing Margins - Securities Financing - Issuer services - Clearing & Settlement Fees - Credit Facilities - Brokerage services -Registrar services - Market data services - Corporate Action Services -ESOP management

- Brokerage membership fees - Dividend Distribution & Services - Registrar transfer & mortgage Fees - IPO & Rights Issue Services - Custody Fees

33 Pioneering IPO Study

DFM has commissioned Independent Research Consultants on an intensive IPO study to:

Tap into the IPO market and research over 500 •Develop a targeted IPO companies in the marketing campaign in 2010- UAE Results will be 2011 used to • Rectifying inconsistencies in the IPO market

• Provide IPO outlook for DFM ‘s shareholders Identify the top 100 companies in prime position of going public

34 Thank You

35 Contacts

Areej Alabdullah Areej Al Saeed Executive Office Manager Management Office Managing Director & CEO’s Office

P.O. Box: 9700, Dubai, UAE P.O. Box: 9700, Dubai, UAE Tel: +971 4 305 5667 Tel: +971 4 305 5606 Fax: +971 4 331 4924 Fax: +971 4 331 4924 [email protected] [email protected]

www.dfm.ae

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