DFM must work on investment interest

What's Down: Dubai Financial Market, the only Arabian Gulf stock market to sell shares to the public has reported another quarter of losses.

The Dubai Financial Market reported a third-quarter loss of Dh1.71 million. Jumana El Heloueh / Reuters

The Dubai Financial Market (DFM), the only Arabian Gulf stock market to sell shares to the public, has reported another quarter of losses.

The third quarter loss of Dh1.71 million, albeit lower than last year's, is a reminder that despite the recent increase in trading volumes, much more work is required to increase the level of investment interest for the bourse to break even.

Margin trading reached Dh337.5m after the recent regulatory introduction. The DFM is optimistic that the accreditation of four brokerages to conduct margin trading will enhance volumes and revenues.

But analysts say the key to boosting trading is the addition of new companies on the bourse.

The DFM's current portfolio of listed companies involves mostly banks, property developers, construction companies, a few logistics firms and a number of secondary listings from Kuwaiti firms.

"More listings and more sectors will make our market more vibrant," said Nabil Al Rantisi, the managing director of brokerage at Mena Corp in Abu Dhabi. "Look at Saudi Arabia, for example. It has 14 different sectors, and each sector has seven to eight companies listed."

Mr Al Rantisi said listings in sectors such as medical services, education and food and beverage, in addition to retail, would trigger renewed interest in the market.

"Those kinds of sectors are closer to the real economy, [producing things] that we consume every day."

The bourse said it planned to introduce other mechanisms such as short-selling, liquidity providing, market making, and securities lending and borrowing.

"We are confident that Dubai Financial Market is well positioned for a new beginning given the various market infrastructure enhancements implemented over the past two years," said the company.

But investors remain uncertain.

"There is a lack of patience, with investors unwilling to pause for a long breath," said Wadah Al Taha, the chief investment officer at Al Zarooni Group, based in Dubai.