UAE stock exchange merger seen as imminent

Deal a 'sign of consolidation' as there won't be competition between markets.
UAE stock exchange merger seen as imminent
BOURSE MERGER: The merger of the UAEs two main bourses looks to be imminent, as trading revenue slumps. (Getty Images)
By Stanley Carvalho
Tue 27 Apr 2010 08:47 PM

A merger of the UAE's two main bourses is imminent, two people familiar with the matter said on Tuesday, with the exchanges seeking to create a single market as trading revenue slumps.

The Abu Dhabi Securities Exchange (ADX) is seen as the driver of a merger with its domestic rival, the Dubai Financial Market (DFM), the sources said.

Speaking to Reuters, an ADX official, who declined to be identified due to the deal not being finalised, said: "The merger is being discussed at the highest level and the outcome is awaited imminently."

He added: "It would be good for both markets, instead of them competing against each other. This is a sign of consolidation in the UAE."

The ADX is owned by Abu Dhabi, home to 90 percent of the UAE's oil reserves and one of the world's largest sovereign wealth funds, while Dubai, which holds an 80 percent stake in DFM through Borse Dubai, last month unveiled a $9.5 billion rescue plan for indebted government conglomerate Dubai World.

The ADX board's term expired in February this year after three years and has yet to be reconstituted.

Earlier this month, Mohammed Al Shaibani, vice chairman of the Dubai's Supreme Fiscal Committee, said a bourse merger would be favourable, while in late March DFM executive chairman Essa Kazim told reporters the bourses' owners had held merger talks.

On Tuesday, Kazim declined to comment when asked by Reuters about the progress of these discussions. He also refused to elaborate on when the DFM's acquisition of Nasdaq OMX's one third stake in Nasdaq Dubai would be finalised.

The $121 million deal was announced on Dec 22, with DFM at the time saying it would take about six weeks to complete.

DFM's profit fell by almost half in 2009 as market turnover slumped 43 percent to a five year low of $47.2 billion. ADX turnover slid 70 percent last year to $19.1 billion.

This collapse in trading is spurring the UAE bourses to consolidate, analysts have said, with many questioning the wisdom of having three stock exchanges - DFM, ADX and Nasdaq Dubai - in a country of 5 million people, while consolidation would likely boost liquidity and with it valuations. (Reuters)

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