Dubai Financial Market Investor Presentation 2011 - 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
www.dfm.ae THE REGION – MENASA / GCC/ UAE
AN ECONOMIC POWERHOUSE MENASA REGION : SOLID ECONOMIC FUNDAMENTALS 2 -PROMISING GROWTH
Population 2008 1,745 1.7x Oil Reserves & Production (Million) as a % of Global Total 1,347 59% Menasa regions is emerging as a powerful 33% 0.8x 0.1x 1.1x economic bloc 15% 17% 158 9% 8% with tremendous 99 103 8% 38 growth potential, 1% combining the MENASA GCC NORTH LEVANT & IRAN & IRAQ SOUTH ASIAIran AFRICA TURKEY MENASA North America Europe South America sovereign wealth Oil Reserves Oil Production funds (SWFs) of the Mena region to the economic GDP 2008 (USD Billion) 4,248 Expected GDP and Population Growth growth story of, ( 2007 -92014.4 CAGR - %) say, India, hence, 7.3 7.4 7% of global GDP 7.1 6.0 the economic 10.0 paradigm shift towards this region 1,371 2.6 6.9 1,073 2.0 from other 836 1.4 1.5 2.2 1.5 542 426 1.2 2.7 emerging markets. 0.9
MENASA GCC North Levant Iran South US UK MENASA GCC NORTH LEVANT & IRAN & IRAQ SOUTH ASIA Africa Asia AFRICA TURKEY GDP Population
Source: www.dfm.ae IMF, World Bank MENASA REGION : SOLID ECONOMIC FUNDAMENTALS 3 -PROMISING GROWTH
The UAE, the second biggest Arab economy, is set to record 3.3% growth in GDP this year, led by a focus on adopting industrial policies that will drive sustainable development across the UAE. The UAE’s -IMF 2012 Forecast
strong Country GDP Growth Projections fundamentals lessened the Country 2010 2011 2012e 2013e impact of the Bahrain 4.1% 1.5% 3.6% 4.8% global Kuwait 3.4% 5.7% 4.5% Iran 5.1% financial crisis Oman 4.1% 4.4% 3.6% 3.8% Qatar 16.6% 18.7% 6.0% 4.3% Saudi Arabia 4.1% 6.8% 3.6% 4.4% UAE 3.2% 3.3% 3.8% 4.0%
Top Destinations for • UAE is leading venue for FDI in MENA Foreign Direct Investment in MENA (2011) after Saudi Arabia $150
$120 • UAE is ranked 22nd globally for Value of Imports and 21st for Exports $90 $60 • The UAE ranked 3rd in the world for „quality of infrastructure‟ $30
$- Billions Saudi Arabia UAE Egypt Qatar
Source: www.dfm.ae IMF, World Bank UAE: 4 GROWTH PROSPECTS
Oil / Gas as % of GDP (2011)
• Recovery in oil prices 21% • Strong growth in the non- BAHRAIN hydrocarbon sector OMAN 41% • UAE‟s service driven economy 41% benefitting from the global trade SAUDI ARABIA 45% to Growth to • USD 50 billion worth of UAE infrastructural projects still under Key Contributors Contributors Key construction in UAE QATAR 61%
UAE Trade Matrix UAE Import/Export Projections
Source: www.dfm.ae Dubai Chamber of Commerce DUBAI
THE FINANCIAL HUB OF MIDDLE EAST DUBAI: 6 VISION & ECONOMIC STRENGTHS
“Our vision is clear, our goals are Dubai GDP Share Breakdown by obvious, our strengths are great, our will Economic Sectors – 2011
is strong and we are ready. We want Government Financial Other, 3.36% Dubai to be a global center of Sector, 3.45% Sector, 8.39% excellence, creativity and leadership”. Manufacturin -HH Sh. Mohammed g, 21.14% Ruler of Dubai Dubai’s core Real Estate & Construction, strengths 19.43% remain Well diversified economy based on international trade, banking and Trade, 34.78% fundamentally finance, tourism, information sound technology and real estate Transport, 7.06% Hotel & Restaurants, 2.39% 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 33rd globally. -World Bank Index Strategic location with a strong logistics Trade capacity in UAE has tremendously improved over the years with free-zones infrastructure to bolster trade like JAFZA. Solid tourism sector Hotel occupancy rates remained high throughout 2010, benefitting both tourism and trade activities. - DSC, 2010 Report
Source : www.dfm.ae Dubai Chamber of Commerce DUBAI: 7 RECENT EVENTS
• Organizational restructuring of government departments & related entities
Seems like the stars are • Successful debt restructuring across all sectors with zero defaults aligning for Dubai once again • 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 DUBAI: 8 GROWTH PROSPECTS
Globally fast growing industries Financial with a strong position in Dubai services Tourism
Trade
Oil and gas Globally faster Professional services growing sectors
Communication Transportation Future global and storage Manufacturing growth Average global 2010– 2015 Construction GDP growth
Electricity/ Water Agriculture Globally slower Government growing sectors services
Very weak Average Strong Dubai’s strength by international standards
Sectors qualified to be part of future growth path
Source : www.dfm.ae DSP 2015 CAPITAL MARKETS
UNITED ARAB EMIRATES CAPITAL MARKETS: 10 KEY EXCHANGES IN THE REGION
Istanbul Stock Tunis Stock Exchange Algiers Stock Exchange Casablanca Exchange Damascus Stock Stock Exchange Exchange
Beirut Stock Exchange Iraq Stock Exchange
Palestine Stock Exchange Tehran Stock Amman Stock Kuwait Stock Exchange Libya Stock Exchange Exchange Exchange Egypt Stock Exchange Qatar Karachi Stock Tadawul Exchange Exchange
Muscat Stock Market
Sudan Stock Exchange
Cash & Fixed Income Equity, Index & Commodity Futures Only UAE offer a wide array of trade exchanges/products in the entire MENA region
www.dfm.ae MARKET CAPITALIZATION 11 LIQUIDITY REVIEW
END-OF-PERIOD MARKET CAPITALIZATION (2002 – 2011) USD Billion DFM / ND Markets Breakdown (USD Bn) ND 16.7
DFM 55.5
6 6 7
. .
5 5 1 1 2 9 4 6 2
......
9 9
.
114 138
70 9 15 37 86 83 84 72
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source : www.dfm.ae DFM/ND Analytics TRADE VALUES : 12 DFM PERFORMANCE
TRADED VALUE - DFM (2002 – 2011) USD Billions
Thin trading is recorded across all GCC markets in 2011 with average drop of 50-55% in trade values as compared to
2010
4 4 4 4
. .
9 9 8 8 1 3
. . . . .
8 8 1
. .
96
.
110 0 1 13 94 103 83 48 20 8
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source : www.dfm.ae DFM/ND Analytics MARKET VELOCITY 13 DFM PERFORMANCE
VELOCITY (2002 – 2011)
109.1% 100.5% 96.4%
74.5%
62.5%
37.3%
28.0%
12.4% 7.7% 7.2%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
* Velocity = Annualized Trade Value / Average Market Capitalization
Source : www.dfm.ae Arabian Monetary Fund DFM / NASDAQ DUBAI
TWO EXCHANGES, ONE MARKET UAE MARKETS : 15 REGULATIONS & OWNERSHIP
Regulatory SCA DFSA Authorities (UAE Regulations) (International Regulations)
ADX DFM NASDAQ Dubai Stock Exchanges
Government of 33.33% Ownership ABU DHABI Structure
100% 19 79.62%
.
9 %
1% 66.67%
19.38%
Public Stake
www.dfm.ae DFM : GENERAL INDEX 16 YTD PERFORMANCE
52 WEEKS INDEX PERFORMANCE Index 1800 movement 1600 remained 1353.39 flat between 1400 2010-2011 1200
1000
800
600
400
200
0
2011 2011 2011 2011
2011 2010 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011
/ / / /
/ / / / / / / / / / / / / / / / / / / / / / /
7 5 2 8
6 3 1
/ / / /
/ / /
14 30 13 27 10 24 10 24 21 19 16 30 28 11 25 22 20 17 15 29
4 5 6 9
/ / / / / / / / / / / / / / / / / / / /
7 1 1 2 2 3 3 4 5 6 6 7 8 8 9 10 11 12
12 10 11 12 12
www.dfm.ae DFM : TRADING PROFILES 17 RETAIL VS. INSTITUTIONAL MIX
2011 – TRADING ACTIVITY PATTERN 100% 90% 80% AVERAGE RETAIL TRADING = 73% Trading 70% 60% Activity : 50% Client type 40% AVERAGE INSTITUTIONAL TRADING = 28.3% 30% Mix 20% 10% AVERAGE INSTITUTIONAL TRADING = 27%
TRADING ACTIVITY BY CATEGORY 0%
%
% %
Growth %
15
%
%
21 22
movement is 22 27 seen among 29 institutional investors with INSTITUTIONAL 2011 recording RETAIL
27% market
%
% %
share %
85
%
%
79
78 78
73 71
2006 2007 2008 2009 2010 2011
www.dfm.ae Source : DFM / ND Analytics DFM : TRADING ACTIVITY 18 LOCAL VS. FOREIGN INVESTMENT
UAE VS. NON 31% 30% 37% 40% 44% 48% UAE TRADING ACTIVITY 69% 70% 63% 60% 56% 52%
2006 2007 2008 2009 2010 2011
UAE Non-UAE
5% 12% 15% 12% 18% 20% NON UAE 17% TRADING 22% 12% 23% 22% ACTIVITY 14% 9% 6% 5% 6% 6% 6%
2006 2007 2008 2009 2010 2011
GCC OTHER ARABS OTHERS
Source : www.dfm.ae Reuters / DFM / ND Analytics DFM : TRADE MATRICES 19 SECTOR MIX
9.66% 7.11% Trade Activity – 10.58% By Sector Telecom 2011 Financial Services Banking
12.72% Insurance Services Others Industrial 2.33% Real Estate 55.30% 2.19% Transportation 0.11% 0.01%
* Includes Materials / Utilities / Consumer Staples
Source : www.dfm.ae Reuters / DFM / ND Analytics DFM : OWNERSHIP 20 SHARE OWNERSHIP RATIOS
BY TYPE OF INVESTOR BY NATIONALITY
2.60% 4.17% Distribution 4.76% of Share Ownership 36% ARAB 2006 -2011 RETAIL GCC INSTITUTIONAL OTHERS 64% UAE
88.47%
FOREIGN OWNERSHIP AS % OF MARKET CAPITALIZATION 13% 12% 12% 12% 10% 8%
2006 2007 2008 2009 2010 2011
Foreign Ownership
www.dfm.ae DFM : MARKET ACTIVITY 21 DFM SHARE PRICE
AED DFM Share 1.8 Price 1.6 Movement 2011 1.4
1.2 AED 0.84
1
0.8
0.6 Trade Volume 0.4 YTD 2010 0.2
0
2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011
2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011
/ / / / / /
/ / / / / / / / / / / / / / / / / / / / / / / / / / / / / /
6 1 2 3 5 8
1 4 5 7 9
/ / / / / /
/ / / / /
04 01 01 02 03 03 03 05 05 06 06 07 07 08 08 09 09 10 10 10 11 11 12 12 12
8 2 9 2 1 8
/ / / / / / / / / / / / / / / / / / / / / / / / /
11 11 10 10 11 4
20 20 31 21 13 22 31 19 30 19 28 19 28 17 28 20 29 10 19 30 13 22 13 22
www.dfm.ae DFM : 22 REVENUE MIX
4.8% 6.3% Revenue 11.3% Breakdown 26.4% 2008-2010 18.4% 32.0% 28.5%
DFM is 30.6% actively moving towards revenue 75.3% diversificati 63.2% on with 60.2% 2010 43.0% witnessing 40% revenue from diversified portfolio 2008 2009 2010 2011
Trading Fee & Commisions Investment Income Other Income
www.dfm.ae DFM : INVESTOR-CENTRIC ATTRACTIVE PLATFORM FOR LOCAL & 23 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 STRATEGIC INITIATIVES 25 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 STRATEGIC INITIATIVES 26 MSCI UPGRADE
CRITERIA Emerging DFM / ND A. ECONOMIC DEVELOPMENT Key criteria's for Emerging A.1 Sustainability of economic development No requirement Strong economic fundamentals with market status expected GDP growth of 4% for 2011
B. SIZE AND LIQUIDITY REQUIREMENTS B.1 Number of companies meeting the following 3 12 standard index criteria DFM is ready and meets all i) Company size ( Full market cap ) USD 873 Mn USD 71 Bn eligibitly ii) Security size ( Float market cap ) USD 436 Mn USD 17 Bn criteria's for iii) Security liquidity 15% ATVR 33.5% MSCI upgrade to C. MARKET ACCESSIBILITY CRITERIA Emerging C.1 Openness to foreign ownership Significant 49% market status (Current Foreign Ownership – 12%) C.2 Ease of capital inflows/outflows Significant Significant C.3 Efficiency of operational framework Good & tested Good & tested * C.4 Stability of the institutional framework Modest Good *
* Successful DVP implementation and introduction of SBL as part of G30 compliance www.dfm.ae STRATEGIC INITIATIVES 27 G-30 COMPLIANCE
UNCHANGED CHANGED Delivery Vs. 1. T+2 settlement 1. Permitting Local Custodians ability to reject cash and securities settlement of sell Payment : cycle; trades back to executing Broker for settlement if Local Custodians do not receive Implementation 2. Pre-validation of (matched) settlement instructions from clients – Local Custodians now have full sell orders will be control of assets [unnecessary to operate dual accounts]. maintained. This means a 2. Enhancing current rejection process for settlement of purchase trades; seller’s agent trading account 3. Introduction of a Late Confirmation Period of T+4 with local custodian must 4. Securities fails handling mechanisms which comprises: have securities balances for pre- a. Optional buy-in [between T+2 and T+3] DvP validation before a b. Mandatory buy-in by DFM on T+4. methodology sell order can become a valid c. Cash close out against the Local Custodian client [if mandatory buy-in against has been order. selling Broker by DFM fails on T+4]. successfully implemented 5. Penalties for Late Confirmation. at DFM as of May 2011 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 STRATEGIC INITIATIVES 28 ORGANIZATIONAL RESTRUCTURING
DFM New organizational
structure Development
Financial Financial
Services Business
DSX ND CSD
EXCHANGES
• e-Reports & • iVESTOR • Web • Trading Enhancements e-Services Cards Advertizing • Margin Trading • DVP • Dividend • Online • Equity Swaps • SBL Distribution Subscription • Warrants • In-house IPO • Market Data • IPO •Enhanced Brokerage Services System Feed initiatives
www.dfm.ae STRATEGIC INITIATIVES 29 PIONEERING IPO STUDY
DFM Tap into the IPO has market and commissioned research over 500 Develop a targeted IPO Independent companies in the marketing campaign in 2010- Research UAE 2011 Consultants • Rectifying inconsistencies in the for IPO market intensive Indentify the top • Provide IPO outlook for DFM „s shareholders IPO 100 companies in study prime position of going public
The following initiatives have been taken The following initiatives are currently so far: planned: • Publication of the „Guide to going public‟ • Approach the Free Zones in the Northern • Event hosted by DFM for the launch of the Emirates “Guide to going public” for top financial & • Initiate talks with the DED & JAFZA legal advisors • Initiate talks via the Dubai Chamber of • IPO Market Study and meetings arranged with Commerce potential IPO candidates (E&Y) • Nasdaq Dubai Initiative- Regional IPO Market • DFM hosted high profile IPO information Study and meetings to be arranged with workshop for private, semi-government and potential IPO candidates. family owned businesses www.dfm.ae STRATEGIC INITIATIVES ROBUST ENVIRONMENT 30 FOR FUTURE LISTINGS
In-depth market intelligence and value added services
Robust and Investor and reliable trading consumer visibility environment
One of the most In-depth IR and liquid markets in trading analysis the G.C.C.
Free accessibility of international investors
www.dfm.ae ii CONTACTS :
Racha Al Chamut Areej Al Saeed Manager, Investor Relations Office Manager Executive Chairman's Office
P.O.Box: 9700, Dubai, UAE P.O.Box: 9700, Dubai, UAE Tel: +971 4 305 5650 Tel: +971 4 305 5607 Fax: +971 4 331 4924 Fax: +971 4 331 4924 [email protected] [email protected]
www.dfm.ae