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Dubai opens official share trading floor

DUBAI: Dubai opened its official trading floor on Sunday which is expected to give a much needed boost to investor confidence in the United Arab Emirates by offering more transparent trading and financial disclosure.

The Dubai Financial Market was inaugurated by Dubai Crown Prince and UAE Defence Minister Sheikh Mohammad bin Rashid al-Maktoum.

A handful of firms will be listed initially but brokers said more companies were expected to follow suit soon and the process would gain momentum when the second UAE trading floor opens in Abu Dhabi later this year.

The shares of three listed companies were traded on Sunday in the ceremonial opening. Full trading begins Monday.

The new trading floor will immediately make pricing deals easier for brokers by displaying quotes and trades for listed firms now transacted over the counter. Brokers will no longer have to call other dealers to compare quotes.

Brokers said the market regulatory body would also bring greater transparency by demanding more financial disclosure.

They said listed firms would issue financial reports each quarter. At present, the results of traded firms are only made public once a year.

Some 50 firms are now traded over the counter with a market capitalisation of about 100 billion dirhams ($27 billion). Brokers said all these firms could be listed eventually, although it would take time.

UAE share prices have moved steadily downward since peaking in late 1998 but brokers said shares in the over-the-counter market had moved higher as investor confidence rose ahead of the Dubai floor opening.

Brokers said the official market could open the way to allowing foreign investment in UAE shares. They said firms would need to change their articles of association, which could allow them to issue shares without voting rights for foreigners.

Existing UAE law allows foreigners up to 49 percent in local firms.-Reuters