Nasdaq Dubai is beginning to sound like that children's song 10 Green Bottles. With the sudden departure of a Chinese security company, there are just 10 bottles left, but for how long can they keep hanging on before another one falls?
Last year Nasdaq Dubai merged with the Dubai Financial Market, the emirate's main exchange, with the aim of bringing in more local listings. But, rather than gaining stocks and trading volumes, the business appears to be declining. DP World, the exchange's main stock, is seeking a cross-listing on the London Stock Exchange later this year. Crash goes another green bottle, perhaps.
But if Nasdaq Dubai's dilemma is one of a lack of liquidity, a sudden wave of it could be equally unsettling for both itself and other exchanges. There is growing speculation in the market the UAE could soon be joining the MSCI Emerging Markets Index, moving from "frontier" to "emerging" status. It failed to gain this lofty status last year when international fund managers reportedly claimed there was neither the interest nor the capacity. The MSCI Index is designed to measure equity market performance in emerging markets. Join the index and a country is guaranteed greater international interest and perhaps even investment.
But even if the UAE is upgraded this time around, could it cope with a sudden influx of cash? Some stocks, such as Etisalat, the country's largest company by market capitalisation, would be excluded because foreign investors are not allowed to buy its shares. Others, including du, Emirates NBD and National Bank of Abu Dhabi, allow only a limited purchase by non-Emiratis. Etihad, the fast-growing airline, has yet to float.
Are there too many exchanges and not enough listed companies? Frontier or emerging, there are still a few issues that need to be resolved locally before the market becomes fully developed.