The brokerage industry in the UAE should probably be halved, as too many firms are unable to cope with the fallout of the economic crisis
Shuaa Securities sees fewer brokers in UAE
DUBAI // The brokerage industry in the UAE should probably be halved, as too many firms are unable to cope with the fallout of the economic crisis, the head of one of the country's largest brokerages said. "I think that for the UAE market having nearly 100 brokerage licenses is overkill," Mohammed Ali Yasin, chief executive of Shuaa Securities, told Reuters TV. "In general shrinking it to somewhere near 50 is maybe closer to what the market needs," he said.
Since 2004 a large number of financial services groups established a presence in the UAE to benefit from the oil- and property-driven boom taking place in the region. In 2008, the Dubai and Abu Dhabi stock market fell 72 and 47 per cent respectively, adding pressure to the fragmented brokerage industry to consolidate. Many companies that were set up during the peak years in 2006 "were really not set up for the cycles of the business," Mr Yasin said.
Shuaa is only interested in snapping up some of its regional peers if they offer sufficient, additional market share, he said. Only 35 of the brokers active in the UAE own one or more than one per cent market share, he said. "If we are looking to acquire a brokerage company we are looking at market share, we have only those top 35 that bring value," Mr Yasin said. Shuaa Securities in May expanded in Jordan and is also active in Egypt and Saudi Arabia.
Its parent company, Shuaa Capital only recently resolved an ongoing legal tug-of-war with Dubai Banking Group (DBG), making DBG its biggest shareholder and named a new chief executive. Mr Yasin acknowledged that the legal issues have "scared some of the institutional clients out," but that resolving the legal battle with DBG and the new CEO appointment should enable the company to regain these clients.