DMCC sets its sights on China growth
The Dubai Multi Commodities Centre (DMCC), a Dubai-based free zone, is looking to China for future growth, after signing up a record amount of new companies last year.
DMCC said on Wednesday that it signed up 2,016 new member companies last year, bringing the total number of companies to 13,500.
“Dubai and DMCC’s mandated goal of connecting new markets with well-established markets is clear and in 2016 we achieved it by welcoming an average of seven new companies every working day,” said Ahmed bin Sulayem, DMCC’s executive chairman. “This brings significant foreign direct investment to Dubai.”
The free zone signed more than 20 memorandums of understanding (MoUs) last year, focusing in particular on Chinese organisations including the Shanghai Gold Exchange, the China Silver Group and Mega Capital & Yunnan State Farms Province.
Of particular note was the MoU signed in October with Shanghai Gold Exchange, the largest of its kind worldwide.
“China is the world’s largest producer and consumer of gold,” said Gautam Sashittal, DMCC’s chief executive.
“What we’ve done with this partnership is to bring the China gold benchmark price listed on the Shanghai Gold Exchange on to [the Dubai Gold and Commodities Exchange], so for the first time global liquidity pools can actually invest in a Chinese dominated price on our exchange in Dubai.”
The Dubai Gold and Commodities Exchange (DGCX), the derivatives bourse majority-owned by DMCC, soft-launched a Shanghai Gold contract last month, quoted and traded in yuan. The contract was officially launched earlier this week at the Dubai Precious Metals Conference.
“It has attracted global liquidity and we have seen members enrol on the exchange so they can trade it,” said Mr Sashittal.
“They see the arbitrage opportunities, they see the investment potential, and of course most importantly they see the relevance of Dubai.”
The Shanghai Gold contract sits alongside DGCX’s Indian Rupee Quanto gold contract, granting access to the world’s second largest gold consumer, alongside US dollar priced benchmarks and spot gold deliverable contracts.
“These developments on the DGCX creates the most powerful gold complex of any exchange anywhere in the world,” said Mr Sashittal.
The DMCC said that trading volumes on DGCX rose by 36 per cent year on year to US$440 billion last year, representing 19.7 million contracts during the year. The exchange traded an average 76,835 volumes a day, the highest average level in its 11-year history.
DMCC increased its stake in the exchange last year to 98.9 per cent from 50 per cent previously.
Last year, Mr bin Sulayem was also appointed as global chair of the Kimberley Process initiative on conflict diamonds, on behalf of the UAE.
Under the one-year chairmanship, the UAE held a series of workshops to develop a uniform methodology on the valuation of rough diamonds, responding to criticism from NGOs over transfer mispricing practices within the trade.
The planned launch of the DMCC coffee centre was also announced last year, offering storage and warehousing facilities, offices and co-location space within a 4,500 square metres temperature-controlled facility. It is expected to be completed in March next year.
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Published: April 12, 2017 04:00 AM