Dr. Obaid Al Zaabi opened the panel discussion held by the Securities & Commodities Authority (SCA) on “The Position of Financial Markets in the UAE".  The event was attended by Rashed Al Blooshi, Chief Executive Officer of Abu Dhabi Securities Exchange (ADX), Hassan Al Serkal, Chief Executive Officer of Operations at Dubai Financial Market (DFM), and a selection of experts, specialists, and major investors in the UAE securities sector.

Dr. Obaid Al Zaabi said that the role of the SCA in cooperation with the markets focuses on completing the legislative structure with the regulations and operation rules which are required and consistent with the international developments. He noted that all the participants in the panel discussion are stakeholders and partners in the development of the financial markets in the UAE.

Dr.  Al Zaabi outlined the key achievements of the SCA attained recently, especially in relation to the development of the regulations concerning the mutual funds, primary market, and governance requirements, and occupying advanced ranks on the World Bank competitiveness indexes, and the launch of the Islamic capital market development strategy.

Factors affecting the Performance of Financial Markets

On his part, MSCI Executive Director Head of Middle East Robert Ansari addressed some points related to the MSCI Emerging Market Index, indicating that the value of companies listed on such index amounts to nearly $1.7 trillion. He also noted the declining performance of the GCC companies listed on the index as a result of the decrease of oil prices which means that they affect the performance of the securities markets.

He added that a package of factors undermine the region's markets at the present time, including the geopolitical tensions, in addition to the fierce competition among the countries of the region to attract the capitals.

In turn, Mohamed Ali Yassin, Managing Director of NBAD Securities, reviewed some statistics about the market performance, noting that the securities market, in comparison with the monetary markets, is attractive in terms of the dividends and returns. Yassin and Ansari both agreed that the declining of the markets is caused by different factors, including the decrease of oil prices, the geopolitical tensions, and the increasing attractiveness of some of the competing markets in the region, in addition to the limited number of IPOs.

Attractiveness of the UAE Market to the Investors

Moreover, Nabil Al Blooshi, Regional Director of International Institutions and Markets Services at HSBC Bank tackled the issue of UAE markets attractiveness to the investors and he indicated the UAE markets ranking on top of the international indexes of the emerging markets. He noted that the markets need incentives to attract the corporate investors and that concentration must be placed on the factors that make the local and foreigner corporate investors prefer the UAE markets to the other markets.

Fathi bin Garirah, Chief Executive Officer of Menacorp, talked about the critical need to merge a number of brokerage firms to form strong entities and he emphasized the importance of promoting the competition among the major brokerage firms.

The SCA's Leading Role

In the Development of the Legislative and Supervisory System

Dr. Obaid Al Zaabi illustrated the key initiatives performed by the SCA in the past two years:

• The SCA developed the regulation of mutual funds in an integrated manner that it became consistent with the UCITs European system. The UAE financial market needs the formation of more local mutual funds.

• The SCA applied the self-regulatory organizations (SRO) model in the UAE financial markets. The UAE works closely with the financial markets to complete the legislative structure of such tools and to approve them.

• The SCA took extensive steps automating its services, which contributes in the development of the licensing system in order to renew and issue the licenses electronically. Currently, the SCA works on developing and upgrading the technological environment to accommodate the technologies of the 4th technological revolution, including the Block chain.

Rashed Al Blooshi:

Digital Leadership of the ADX

And Secure Investment Environment Produce the Highest Return Regionally and Internationally

His Excellency Rashed Al Blooshi, CEO of ADX, pointed out that ADX took the lead applying the best corporate governance standards in the region which enhanced the investors' confidence in the market and increased the investments. Since the beginning of this year and till the end of the third quarter, the total amount of tradings (selling and purchase) exceeded AED76 billion, with an increase rate of nearly 4% as compared with the same period in 2016. Further, the number of tradings increased by 7% in the same period, which indicates that the ADX represents a secure investment environment for the companies and investment institutions.

The CEO of ADX called upon the investors to take advantage of the investment opportunities available in the ADX, taking into account that the ADX is one of the best markets in the region and the world in terms of the return on investment as the ratio of cash dividend payout of the companies listed on the ADX recorded nearly 5.2% by the end of 2016.

Hassan Al Serkal:

Embracing the Development and Innovation Approach

And the Diversity of Products and Investment Opportunities

Hassan Al Serkal, CEO of Operations at DFM, said that the DFM strategy concentrates on enhancing its competitiveness and diversifying the products and investment opportunities presented to the investors, as well as adopting the development and innovation approach with regard to the DFM services delivered to the investors.

He indicated that in line with the DFM strategy for 2021, it inaugurated a number of specific initiatives, including the launch of an integrated platform for the exchange traded funds (ETFs), which is the first of its kind in the region. Further, DFM launched the margin trading services, liquidity provision, market maker, and direct market access (DMA) with the aim of providing mechanisms that improve the effectiveness and sustainably boost the trading activities.

Al Serkal unveiled DFM's preparations to launch a new array of services and products, including the regulated short selling and futures trading. Moreover, DFM is keen to encourage the listed companies to follow the best international practices with regard to governance, transparency, disclosure, investor relations, as well as strengthening its relations with the international investment community through the investor conferences and promotion events organized by the DFM in the international finance capital cities.

Suggestions and Recommendations

The panel discussions came up with some suggestions and recommendations which were covered in the discussion and exploration, and they are outlined below:

The importance of focusing on the following aspects which are considered requirements of advancing the markets on MSCI indexes:

• Facilitate market access for the investors

• Increase foreigner equity rates in the companies

• Increase the market value of the markets by listing major companies that attract the investors

• It is extremely important to issue a regulation/ legislation to form special purpose vehicles

• Educate and raise the awareness of the investors about investment in the securities markets

• Issue active stock indexes along with the current indexes

• Increase the capital requirements for the brokerage firms to be consistent with the services delivered by them, and encourage these firms to obtain multiple licenses to diversify their revenues.

• Encourage the CEOs of the companies to talk with the investors about the challenges and projects related to the companies and increase focus on raising the investors' awareness through prompt disclosure in case there are material factors that decrease the stock prices, or in case the company faces problems.

• Set criteria for occupying the posts of Chairman of Board of Directors/CEO/Member of a Board of Directors of a Public Shareholding Company through committees appointed for this purpose by the members of the Board of Directors.