Dubai brokers switch stocks for sandwiches as volumes plunge

Nabil Rantisi, who sold stocks during the UAE boom, now oversees orders of roast beef and Yorkshire pudding wraps from crowds including former clients.

“Business was getting too slow, and at some point you have to decide where time would be spent in a more valuable way,” said Rantisi, who quit his job as the senior vice president of brokerage at Rasmala Investment Bank in Dubai in June to help start a deli named 1762. The 34-year-old now works a few hundred meters from where he used to fulfill share orders.

Three years after the Dubai bubble burst, its financial industry is still in decline and shows little sign of recovery. While the emirate successfully restructured debt and invested in transport and tourism, the number of employees in the Dubai International Financial Centre fell to 11,331 in July of last year from 11,436 in 2009.

As trading volume on the Dubai Financial Market plunged 77 percent after 2009, 41 of the 98 local brokerages active in 2008 suspended operations. Banks from Credit Suisse Group to Nomura Holdings trimmed their equities divisions. Al Futtaim HC Securities, a Dubai-based broker ranked first by value traded in July according to the Dubai Financial Market website, said Jan 4 it would end operations in the UAE.

The crash followed real-estate speculation as government and state-owned companies amassed about $110bn in debt. Dubai is home to the world’s tallest skyscraper and palm-tree shaped islands off its coast. By early 2008, the benchmark DFM General Index had risen almost six-fold in five years.

The market value of shares in the UAE is now $97bn, less than half the $206bn at the end of 2007, according to data compiled by Bloomberg. Foreign investors have reduced holdings of Dubai stocks amid Europe’s debt crisis and political uprisings that ousted leaders in Egypt and Libya. They bought shares worth AED2.8bn ($762m) in the third quarter, down 83 percent from the same period in 2009, according to the Dubai Financial Market website.

Trading volume in Dubai plummeted to a six-year low even after state-owned holding company Dubai World reached a restructuring agreement with creditors in March. The company roiled global financial markets in 2009 when it sought to halt repayments on about $25bn of debt.

The UAE will have to wait at least until June to be upgraded to emerging market from frontier market status in MSCI Inc. indexes, which determine the stocks that tracking funds buy.

With little to trade, ex-stockbrokers are running restaurants, nightclubs and luxury hotels, waiting for a catalyst to reignite markets. Vyas Jayabhanu, the manager of Al Dhafra Financial Broker, has spent the past year developing Boutique 7 Hotel and Suites, a four-star Dubai hotel complete with a bar, a café and soon a nightclub.

Business has been good, Jayabhanu, 35, said in an interview over coffee at the hotel’s Garden of Eden café. “If you’re bankrupt, you drink more,” he said. “It’s a win-win situation.” The café sports tables made of wood imported from Scotland, surrounded by trees and bushes, and offers shisha, the water-pipe smoked in the Middle East.

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