-- Posted Thursday, 21 January 2010 | Digg This Article | | Source: GoldSeek.com

Volumes on the Nasdaq Dubai share trading platform grew by 30 per cent to 3.1 billion shares last year, a rate of growth that could power this minor global exchange to prominence over the coming years, despite and even because of the economic woes presently afflicting Dubai.

Last December Nasdaq Dubai became a 100 per cent owned subsidiary of the Dubai Financial Market, and the expectation is that collaboration between these exchanges will promote higher liquidity and more listings, especially cross-listings to bring more global investors into Dubai stocks.

Derivatives launched

Great enterprises often have the most humble of beginnings, and that might also turn out to be the case for derivatives trading on the Nasdaq Dubai which launched in January 2009 with a mere 90 contracts traded in the month.

However, volumes grew exponentially from this very low base to total 125,00 for 2009 with 73 per cent of contracts written in the second half of the year.

In more mature global markets the volume of derivative trading can easily exceed the value of trading in actual stocks. So far the Nasdaq Dubai has listed futures in 21 individual UAE companies and a UAE index. In future the plan is for regional GCC futures to be listed in Dubai, a huge potential market.

But for now the Nasdaq Dubai remains a trading platform of great potential in frustrating circumstances. Investors are wary again of Dubai amid a global economic downturn and after the collapsing of the local real estate boom and the bad debts left behind.

Gold ETF flops

This has even dimmed interest in trading Dubai Gold Securities on the Nasdaq Dubai. Only 81,522 gold contracts were traded in 2009, despite a great year for gold as an investment class and being unique as a shariah compliant exchange traded gold fund.

According to a survey by Shuaa Capital more investors are positive about the outlook for stocks on the Nasdaq Dubai in the first half of 2010 than negative. But it would be easy to dismiss this as a simplistic projection of the rally of 2009 onwards into 2010 rather than a more sober assessment of the outlook.

Other commentators expect Dubai stocks as a whole to hit an important bottom in 2010, perhaps before the major debt issues facing the emirate are cleared or just afterwards if they are not.

From then the Nasdaq Dubai should become the first port of call for any foreign investor looking to invest in the UAE, and also the wider region as the futures market develops. So to that extent the volume gain of 2009 is an indicator of brighter times to come.

-- Posted Thursday, 21 January 2010 | Digg This Article

About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in 1999 to complete his first book, a history of the Bovis construction group.

Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in www.ameinfo.com, which later became the Middle East's leading English language business news website.

Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time www.ameinfo.com prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.

He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog www.arabianmoney.net is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.

Order my book online from this link

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