Turbulent times

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Kat Slowe talks to Jeff Singer, the CEO of Nasdaq Dubai, on how the stock exchange is dealing with falling share prices amid the global economic downturn.

Jeff Singer, the CEO of Dubai's second bourse, NASDAQ Dubai, has faced a tougher year than most. When he first arrived in Dubai, back in the summer of 2008, the market was flush with liquidity and the exchange had just listed its biggest share yet, DP World, the Middle East's largest ports operator. The optimism was short lived.

"I got here on July 1 and I had some meetings with brokers and asset managers and the [only] questions they asked me was ‘why on earth would we ever invest in something outside of Dubai when we can hit 30-40 percent right here?' That line of logic lasted for about three weeks," shrugs the former senior vice president and head of international for the NASDAQ OMX Group, the world's largest exchange company.

DP World was meant to be the changing of the tide for the bourse, the Gulf's first stock market open to investors and issuers of all nationalities, which has struggled with low volumes in trading since its inception in 2005. But in the two years since its listing, the firm, which raised $4.96bn during its IPO, has lost 72 percent of its value.

In March, DP World chairman, Sultan Ahmed bin Sulayem, said the company would "evaluate all available options" to address its declining market value. In May, it was reported that private equity firm, Abraaj Capital, may buy a stake in DP World. If the deal did go through, the shares for the sale would come largely from the free float of stock traded on NASDAQ Dubai, significantly reducing the port operator's share float, which may force it to delist.

Although the deal remains clouded in doubt, Singer remains confident that the bourse is well-prepared: "It certainly wouldn't be positive when most of your stock is taken off, but we have contingency plans in other areas in terms of new listings and new products to buoy up the exchange for different sources of revenues."

Depa shares down

Singer is also working closely with Dubai-based Depa, the interior fit out company that is responsible for fitting out the interiors of the Burj Dubai. The firm's shares have fallen around 50 percent since last year and in August it cancelled more than 12 million shares that it had repurchased after saying its stock was undervalued. Depa says it plans to cancel subsequent repurchased shares on a quarterly basis.

Singer agrees that the firm's share price is undervalued, but argues that the company continues to trade better than other public companies of a similar size. "If we compared [Depa] to companies that have small floats and smaller shareholder bases it trades very well and, even when we compare it to all the companies in the most liquid markets of the world, it is in the top 40 percent," he says. "If [Depa] wants to increase the liquidity, the company needs to make a decision on expanding its shareholder base and the amount of shares available to trade."

Since his arrival, Singer has added a number of new products to the bourse, which he believes will act as an additional source of revenue. In November, the exchange introduced the UAE's only equity derivatives platform. Singer describes this market as an ideal way for the stock exchange to diversify its revenue base and adds it could be the beginning of an entirely new platform for the region. "This is an area that's right on the very beginning frontier of being able to do derivatives and I hope that we have a role in the overall unfolding of the markets," he says.

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