The GCC's only listed exchange is working on initiatives to boost liquidity
DFM's third quarter net profit slumps 22% on lower trading commissions
The Dubai Financial Market (DFM), the only publicly listed exchange in the Arabian Gulf, recorded a 22 per cent drop in the third-quarter net income, pulled down by lower trading commission fees amid lack lustre trading.
Net profit in the three months ending September 30 slipped to Dh27.7 million, from Dh35.4m reported a year earlier.
Revenue fell 8.8 per cent to Dh74m, down from Dh81.1m while trading values for the third quarter plunged 23 per cent to Dh16.7 billion from Dh21.7bn recorded in the year-earlier period. Commission fees are the main source of income for the exchange.
Dubai’s benchmark DFM General Index (DFMGI) has gained 2.8 per cent since the beginning of this year, while the shares of the bourse that trade as DFM Company are down 7.2 per cent year-to-date.
Stock markets in the GCC region, including the DFM, have missed the global equities rally this year amid slowing economies and lower oil prices which have kept investors on the sidelines.
The S&P 500 Index in the US on the other hand, has hit multiple records in 2017 while MSCI’s benchmark tracking performance of the emerging markets has also reported significant gains.
There are now signs of a an uptick in trading activity. The DFM is working on a number of initiatives to boost liquidity, including the introduction of short-selling – the practice of selling borrowed shares in the hope of buying them back later at a lower price.
The bourse is also expecting to host new companies on its trading platform including the real estate development business of Emaar Properties, when the UAE’s biggest listed developer floats a 20 per cent stake in its unit in November.
“We look forward to see further momentum during the coming period propelled by the strong, competitive and globally reputable national economy as well as DFM’s various initiatives,” said Essa Kazim, chairman of DFM.
Nasdaq Dubai and DFM will this year launch futures contracts linked to the DFMGI that will trade on Nasdaq Dubai’s equity futures market, in a move intended to expand the exchanges’ offerings to investors.
Nasdaq Dubai last year initiated single-stock equity futures that now feature 13 companies, including eight traded on the DFM.
“As part of DFM’s strategy 2021, we have launched numerous initiatives including; the ETF trading platform and the liquidity provision and market making service, which currently includes two members providing the service to three listed companies,” said Mr Kazim.