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UAE:
MSCI’s forthcoming reclassification of UAE indices in May is expected to
attract greater foreign investments into the country. Industry players
anticipate huge inflows into the emirates’ financial markets,
particularly affecting the Abu Dhabi Securities Exchange (ADX) and the
Dubai Financial Market (DFM).
In an emailed statement to Islamic Finance news, Hamed Mokhtar, the managing
director at Fortress Investments, a Dubai-based private banking and
wealth management firm, explained: “This upgrade will help boost
liquidity and attract more investors to the country. We anticipate
significant inflows of capital into the UAE markets from international
investors immediately after the actual upgrade in May 2014.” He opined
that foreign funds which follow the MSCI Index will consider investing
their capital in the UAE from that period onwards.
According to Hamed, Dubai’s benchmark index was regarded as the world’s
best-performing stock recently; and the expected merger between ADX and
DFM is set to benefit investors and attract new ones into the market.
Together with the Securities and Commodities Authority, the collaboration
between the two bourses offers an ideal investment environment as well as
advanced legislations matching the expectations of local and foreign
investors. “We expect higher volumes in the daily trading at ADX and DFM
in the coming period,” said Hamed.
Back in November 2013, the Emirates Securities Market was upgraded from
‘Frontier’ to ‘Emerging Market’ by S&P and Dow Jones. In the
subsequent months thereafter, the industry witnessed several financial
institutions raising their foreign ownership limits – some of which were
Shariah compliant entities: Mashreq (49%), Dubai Islamic Bank (25%), and
Dubai Investments (35%). In addition, Abu Dhabi Islamic Bank is currently
in negotiations with the economic department of Abu Dhabi to refine
property laws on foreign ownership to enable international investors to
acquire shares in banks that own property in the emirate.
Hamed further highlighted that the growth of the financial markets in the
UAE is underway on the back of the country’s economic proposition and
sound legal framework. “With this expected boost in the UAE’s financial
sector, there will be a greater need for financial advisors to provide
clients with a clearer investment direction and a more active wealth
management approach to match this uniquely dynamic economic environment,”
he concluded.
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