Dubai Financial Market Investor Presentation 2011 - 2012 i

MENASA : Macroeconomics ………………………. 1

Dubai : ‟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 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 & IRAN & IRAQ SOUTH ASIAIran TURKEY MENASA 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 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