Major Financial Markets in the United Arab Emirates

United Arab Emirates is considered as one of the fastest developing region in the world. The globalization has been giving an opportunity for organizations as well as individuals to enter into the Gulf region and gain the financial benefits. The financial markets have been playing a huge rule in impressive growth rates of UAE. In addition to the domestic organizations, most of the international organizations are also listed on stock exchanges of UAE. This small research paper identifies and analyzes major financial markets of UAE.

In the analysis, the paper has elaborated on historical backgrounds, listed companies and major industries and regulations of major identified financial markets

There are six major financial markets in UAE. They are:

1. Bahrain Stock Exchange
2. Amman Stock Exchange
3. Abu Dhabi Securities Exchange
4. Dubai Financial Market
5. Kuwait Stock Exchange
6. Muscat Securities Market.

Bahrain Stock Exchange was established in 1987. With the 29 listed companies, this stock exchange was started its operations in 1989. Now, the stock market has 50 listed companies.

BSE will be operated a group of independent Board of Directors chaired by the Governor of the Central Bank of Bahrain (BSE, 2012). BSE is operated majorly based on three indices. Most of the listed companies of BAE have come from sectors such as healthcare sector, commercial bank sector, insurance sector, services sector and industrial sector. Some of the well known companies among the listed companies of BSE are National Bank of Bahrain, Arab Banking Corporation,

Gulf Monetary Group, Arab Insurance Group, Bahrain Parking Company, Aluminium Bahrain and United France Company.

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There stock market has three major indices. They are Dow Jones Bahrain Index, Estirad Index and Bahrain All Share Index (BSE, 2012). The securities must be traded through registered brokers only. Every practice that is carried out at Bahrain Stock Exchange should be followed the regulations of Decree – law 4/1987.

Amman Stock Exchange was established in March 1999. As per the data complied in 2011, the Amman Stock Exchange has 247 listed companies. Amman Stock Exchange is operated by a seven independent Board of Directors. As the Board of Directors will not involve in the day-to- day operations of the stock exchange, the Chief Executive Office will the responsibility of reporting the operational progress to Board of Directors (ASE, 2012). Most of the listed companies of Amman Stock Exchange belong to financial sector, insurance sector, real estate sector, healthcare sector, transportation sector, tourism sector and information technology sector etc.

Some of the major listed companies of Amman Stock Exchange are Arab Bank, Jordan Islamic Bank, Middle East Insurance, Union Investment Corporation, The Consultant and Investment Group, Trust International Transport, and South Electronics etc (ASE, 2012). The core values of the Amman Stock Exchange are fairness, transparency, outstanding and creativity. Every organization, which is listed on the on the Amman Stock Exchange, should follow the Security Law, Internal By-Law, Administrative Internal By-Law, and Corporate Governance Code etc.

Abu Dhabi Securities Exchange was established in November 2000 to trade shares of all UAE companies. As of now, the Abu Dhabi Securities Exchange has 67 listed companies. Though this stock exchange has more listed companies when compared to the other contemporary stock exchanges, the trading volume is very less. The stock exchange has four trading locations. They are Abu Dhabi, Sharjah, Al Ain and Fujairah. Most of the listed companies of Abu Dhabi Securities Exchange have come from four major sectors (ADX, 2012). Some of the sectors include Banking Sector, Insurance Sector, Services Sector and Industrial Sector.

Some of the major listed companies on Abu Dhabi Securities Exchange are Abu Dhabi Commercial Bank, First Gulf Bank, Noor Islamic Bank, Sharjah Insurance Company, Emirates Driving Company, United Insurance Company, International Fish Farming Company, National Marine Dredging Company, Abu Dhabi Ship Building Company and Abu Dhabi National Hotels Company etc (ADX, 2012). As per the regulations of ADX, Board of Directors will take the responsibility of settling issues between brokers and investors, trading days and trading times. Investors will only be allowed carry out the trading operations through registered brokers only. Every customer, who plans to trade on ADX, must satisfy the requirements of SCA Anti-Money Laundering Regulation Manual (ADX, 2012).

Dubai Financial Market was established in March, 2000. As per the data complied in 2012, the Dubai Financial Market has 61 listed companies. Whilst most of these listed companies of DFM belong to United Arab Emirates, some listed companies belong to countries such as Kuwait, Sudan, Oman and Bahrain etc. Until 2006, DFM was a fully owned organization of Government of UAE. In 2006, it has turned into a public organization which 20% of the shares issued to public through initial public offering (IPO) (DFM, 2012).

Most of the listed companies of Dubai Financial Market belong to sectors such as Real Estate, Banking, Financial Services, Insurance, Transportation, Building Materials and Customer Staples etc. Some of the listed companies of Dubai Financial Market are Dubai Refreshment Company, National Cement Company, Air Arabia, Agility, Arab Heavy Industries, National General Insurance, Dubai Insurance Company and Dubai Investment Company etc. DFM will be governed by Securities and Commodities Authority (SCA) (DFM, 2012). SCA will have rights to impose rules and regulations for smooth trading and conflict resolution among stock exchange, brokers and investors. The primary responsibility of SCA is to protect the rights of investors by regulating both listed organizations and brokers (DFM, 2012).

Kuwait Stock Exchange is considered as one of the oldest stock exchanges in UAE Market. Though the stock exchange established in 1952, the actual operations were started in 1962 when the country has passed laws to regulate the stock market (KSE, 2012). As a largest and oldest stock exchange of gulf region, this stock exchange has been gaining the recognition and prominence across the world.

Very similar to other stock markets, Kuwait Stock Exchange has more listed companies from sectors such as Food and Beverages, Services, Industrial, Real Estate, Insurance and Banking. In addition to these sectors, some of the companies are listed in the category for Non-Kuwait Companies. Some of the major listed companies of Kuwait Stock Exchange are Commercial Bank of Kuwait, Securities Group Company, Kuwait Real Estate Company, Tamdeen Real Estate Company, National Industries Group, Hilal Cement Company, Mobile Telecommunications Company and AL Eid Food Company etc (KSE, 2012).

When compared to other stock markets of Gulf region, KSE is considered as an independent stock exchange because this is the only stock exchange, which has got the rights to act an independent judicial personality to deal with the litigations within the regulations of the stock market (KSE, 2012). The stock exchange will follow its own procedures to carry out trading activities and smooth functioning of the day-to-day transactions.

Muscat Securities Market was also considered as one of the oldest stock exchanges of Gulf region. It was established in June, 1988 by Royal Decree to monitor and control the securities markets of Oman. As per the data complied in 2012, the Muscat Securities Market has 167 listed companies. Stocks will be traded on an index called MSM30 (MSM, 2012).

Thos Muscat Securities Market 30 Index was established in 1992. The number of listing companies on this index is 30; based on the profitability and performance of the companies the listed companies may vary from one financial year to other. The Muscat Securities Market has awarded both ISO 9001:2008 and ISO 27001:2005 certifications; whilst the first one is awarded for right practices in trading activities and the second is awarded for best information security management system.

Most of the listed companies of Muscat Securities Market have come from Investment Sector, Banking Sector, Services Sector, Insurance Sector and Industries Sector. Some of the listed companies of Muscat Securities Market are Gulf Hotels, AHLI Bank, Bank Muscat, Global Financial Investment, Gulf Stones, National Gas, National Finance, National Securities and Oman Cement and Oman Fisheries etc.

The regulations of Muscat Securities Market are said to be very stringent. Unless organizations show solid profitability, it is impossible for new organizations to get listed on Muscat Securities Market. To classify companies, the stock exchange has categorized market into 3 types. They are regular market, parallel market and third market (MSM, 2012). To list under the category of regular market, organizations need to show great performance. Whilst parallel market belongs to new entrants, third market belongs to organizations that suffer from financial difficulties.

Six major financial markets were identified in this research paper. They are Bahrain Stock Exchange, Amman Stock Exchange, Abu Dhabi Securities Exchange, Dubai Financial Market, Kuwait Stock Exchange and Muscat Securities Market. The historical information such as data of establishment, number of listed companies and number of indices of every financial market was provided. The paper has noted some of the listed companies of all major stock markets and industries. The paper has also listed regulatory governances of all financial markets.