UAE should merge bourses to boost trade, CFA survey says

Poll of investment professionals also finds more than half back GCC monetary union
The UAE’s three exchanges have been dogged by low liquidity and declining turnover in recent years. The country’s first IPO in two years was completed in March
By Joanne Bladd
Mon 21 Mar 2011 07:27 PM

The UAE
should merge its three stock exchanges to boost trading volumes and improve
visibility for foreign investors, a survey of investment professionals said
Monday.

Ninety-three
percent of nearly 200 professionals from CFA charters in nine Middle Eastern countries
said a single UAE bourse would improve liquidity levels, the poll found.

The UAE’s
three exchanges have been dogged by low liquidity and declining turnover in
recent years. The country’s first IPO in two years was completed in March.

The results were part of the first Middle East market
sentiment survey run by CFA Emirates, an association of investment
professionals who hold the Chartered Financial Analyst qualification.

According
to the survey, equities will be the best performing asset class in 2011,
followed by commodities. Qatar is forecast to be the best performing
share market this year followed by Saudi Arabia and Abu Dhabi. Bahrain, which
has seen more than a month of anti-government protests, is likely to be the
worst performer, the survey found.

Despite widespread political turmoil in the region, 43
percent respondents said they were confident of economic growth for their
businesses this year.

Those in the UAE were the most optimistic, with 59 percent
saying they were bullish on growth.

Domluke Da Silva, an executive committee member of CFA
Emirates, said the survey was a useful indicator of sentiment across the Middle
East.

“Whilst it is difficult to forecast outcomes in the current
environment it shows a strong belief in equities as an asset class,” he said.

More than
half of respondents also said the six Gulf states should join in monetary
union, with 56 percent saying the move would be good for the region.

The UAE, the second largest Arab economy, opted out of the
planned union in 2009, leaving Saudi Arabia, Kuwait, Bahrain and Qatar to
pursue the initiative.

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