Nasdaq Dubai plans Saudi index launch after introducing kingdom's equity futures

The exchange is expanding its futures offerings beyond UAE companies

Nasdaq Dubai on Wednesday launched futures trading on the shares of 12 leading Saudi Arabian companies. Courtesy Nasdaq Dubai

Nasdaq Dubai plans to add this year trading on a Saudi index to its list of products after launching Saudi equity futures, its first single stock futures from outside the UAE, its chief executive said.

Nasdaq Dubai, on Wednesday, added Saudi equity futures, bringing the total number of the single stock futures trading on the bourse to 29, which include 17 of some of the biggest UAE companies. The exchange last year introduced futures on the Dubai Financial Market’s DFMGI share index as well as the ADI index of the Abu Dhabi Securities Exchange.

“The next step is to introduce a Saudi index [this year],” said Hamed Ali, declining to give more details.

“If you look at the UAE growth rate, we steadily grew our product offerings and you expect the same principle to be applied for Saudi and any other market that we launch.”

Nasdaq Dubai is expanding and diversifying its portfolio of products to boost liquidity and attract new investors, which have a 70 and 30 per cent split in favour of institutional and retail investors respectively.

Other assets classes, including equities, bonds, real estate investment trusts (Reits), and sukuk and Islamic products are already trading on the Dubai International Financial Centre-based exchange.

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Nasdaq Dubai, which first announced the launch of Saudi futures in 2018, listed 12 Saudi companies that have a combined market capitalisation of 794 billion riyals (Dh777.6bn), featuring Saudi Basic Industries Corp, the Middle East’s biggest petrochemical producer, Al Rajhi Bank and Saudi Electricity Company.

“Saudi Arabia is a very strong market in the region and there is a quite a lot of interest in that .... from our investors' base,” said Mr Ali.

Saudi Arabia, the biggest equity market in the Middle East and North Africa, is up 3.3 per cent so far this year. It was among the better performing exchanges in the six-member economic bloc of GCC, defying the international equity markets rout. The benchmark Tadawul All Share Index climbed more than 8 per cent in 2018, pushing it market value to a notch under half a trillion dollars.

Nasdaq Dubai first launched futures trading in 2016, when it listed seven UAE companies that later grew to 17.

“We will continue to add products, however, we would like to add products that are of interest to investors,” said Mr Ali.

The bourse, which was the first to offer derivatives and futures trading in the region, also plans to launch later this month futures on MSCI’s UAE share index. The gauge has 11 constituent companies that are among the largest and most liquid in the UAE, including ports operator DP World, Dubai’s biggest listed developer Emaar Properties and the country's top lender First Abu Dhabi Bank.

Under a 2017 licence agreement, Nasdaq Dubai can launch futures and options on MSCI indexes of a number of GCC and regional equity markets.

“The diversity in terms of products is something that is very important for market development and investor attraction,” said Mr Ali.