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Mon 2 Mar 2009 12:06 PM

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Nasdaq Dubai to list gold securities

Bourse to list "Dubai Gold"; each security to represent one-tenth of an ounce of gold & metal stored by HSBC.

Nasdaq Dubai will list gold securities called "Dubai Gold", with each security representing one-tenth of an ounce of gold and the precious metal stored by bank HSBC, a newspaper reported on Monday.

Details of the new security are expected later in the day at an event in Dubai attended by the World Gold Council (WGC), Nasdaq Dubai and the Dubai Multi Commodities Centre (DMCC).

The gold will be stored on behalf of investors by HSBC for a fee of 0.4 percent per year, daily Emirates Business reported, citing a research note by MAC Capital Advisors.

Initially, 50,000 shares will be issued with the issuer retaining the ability to issue up to a billion shares according to demand, the paper said.

Investors have rushed into gold as a haven from the global economic storm and as insurance against potential future inflation.

Reuters initially reported plans for a tradeable gold security in Dubai on Feb. 24.

The WGC sponsors a number of gold-backed exchange traded funds (ETF) worldwide, accounting for about 85 percent of the market. ETFs are listed and traded like equities, giving investors exposure to the gold market without taking physical delivery. Sponsors buy the gold and store it.

The WGC has long planned the launch of a gold ETF in Dubai, and had hoped to start it before the end of last year. The WGC is a trade group funded by gold mining companies to promote the precious metal.

Dubai has a long-established market for gold bullion and jewellery fuelled by strong demand from the Arab world and India. Dubai also hosts gold futures trading at the Dubai Gold and Commodities Exchange (DGCX). The state-run DMCC holds a majority stake in the DGCX. (Reuters)

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