x Abu Dhabi, UAEThursday 20 July 2017

UAE brokerages turn profit for first time since crisis

In another sign the economic recovery is truly under way, brokerages in the UAE have returned to profit after years of losses following the financial downturn.

Traded value on the country's bourses reached Dh119.97 billion in the second quarter. Above, investors monitor trading on the Abu Dhabi stock market. Ben Job / Reuters
Traded value on the country's bourses reached Dh119.97 billion in the second quarter. Above, investors monitor trading on the Abu Dhabi stock market. Ben Job / Reuters

UAE brokerage firms are back in the black for the first time since the global financial crisis.

They made Dh64.3 million in the second quarter, compared with a loss of Dh36.9m last year, amid reignited investor appetite for local stocks in the run-up to the upgrade of the UAE's classification to emerging markets status.

"For a country like the UAE, it was a decent trading value overall to run a business," said Fathi Ben Grira, the chief executive at Mena Corp. The Abu Dhabi-based financial services company recorded a quarterly profit of Dh7.6m, from a loss of Dh1.38m last year, according to financial statements posted on the market regulator's website.

"There's money coming back into the country. Accounts that have not been active for past years started to trade again, there's confidence across all industries of the economy and the stock market is finally reflecting that."

Dubai's benchmark index, ranked second globally, has surged 46 per cent this year. The Abu Dhabi Securities Exchange General Index, ranked fourth globally, has jumped 34 per cent in the same period.

The international index compiler MSCI, which tracks US$7.3 trillion in equities around the world, in June classified the UAE as an emerging market, an upgrade from its previous designation as a frontier market. Traded value on the country's bourses reached Dh119.97 billion in the second quarter, compared with Dh33.7bn in the same period last year, a more than 250 per cent increase.

"Usually the summer and the fasting month of Ramadan happen at the same time, making it a dead quarter for the industry," said Khaldoun Jaradat, a broker at the Abu Dhabi-based Brokerage House Securities.

"But the second quarter was markedly different this year. There were enough commissions from trading volumes to share. Yes, the big fish got a big amount of it, but there was still a decent portion left for the smaller companies, which helped boost their bottom line."

Shareholders at Mena Corp have decided the improvement in trading activity has justified a corporate spending spree. The company has leased 700 square metres at Dubai's Boulevard Tower Plaza, better known as the "Aston Martin building", steps away from Burj Khalifa and The Dubai Mall. Mena Corp's luxury boutique branch, set to open on November 1, will have a giant dealing room for 45 stockbrokers, an auditorium conference room to host listed companies to release results and analysts' presentations with room for up to 40 guests.

In addition, Mena Corp, which ranked number one by traded value on the Dubai Financial Market last month, has been on a recruiting drive for top talent.

Last month, the company hired Talal Al Batayneh as the deputy managing director of brokerage for equity sales and Raed Salama as the head of trading for its Dubai office.

Mr Al Batayneh and Mr Salama were previously employed at Mena Corp's rival Al Ramz Securities, which is also based in Abu Dhabi.

Mena Corp also took three professionals from two other prominent brokerages.

The company hired Yahya Issawi, who was head of sales at Mubasher Financial Services, and Firas Al Zghaibi, who was a senior investment adviser also at Mubasher.

And Hesham Khairy is now head of trading, equity sales for institutional clients. Mr Khairy was previously the vice president institutional sales trader for foreign clients with EFG Hermes.

Mena Corp's shareholder is the bin Hamoodah family. which also holds interests in a number of other businesses including agency rights to Chevrolet, and the beverage franchises Oasis, Lacnor and Milko.

 

halsayegh@thenational.ae