Nasdaq Dubai Launches Futures Trading of 12 Saudi Firms

Nasdaq Dubai on Wednesday launched equity futures trading of 12 Saudi Arabian companies and said it plans to debut trading a Saudi index this year, stimulating investor interest in the kingdom’s capital markets.

Nasdaq Dubai, which launched UAE futures trading in 2016, said the move opens a new route for investors to gain exposure to the performance of the region’s leading companies, as well as new hedging tools to take long and short positions.

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The companies identified in the new offering have a combined market capitalization of over $200 billion, representing more than 40 percent of the Saudi stock exchange.

The list includes big names such as Saudi Basic Industries Corp (SABIC) , Al Rajhi Bank, Alinma Bank, Almarai Company, Dar Al Arkan Real Estate Development Co, Etihad Etisalat Company, Rabigh Refining and Petrochemical Co, Saudi Arabian Mining Company , Saudi Cement Company, Saudi Electricity Company, Saudi Kayan Petrochemical Company, and Altayyar Travel Group.

As an expanding and liquid exchange with a broad international investor ‎base, Nasdaq Dubai provides attractive opportunities to make markets in a ‎variety of securities. The market currently consists of single stock futures on ‎contracts of 17 leading UAE-listed companies. The exchange plans to increase its range of equities including listing further initial ‎public offerings (IPOs).

Hedge and Leverage Opportunities

With the exception of Kuwait, Gulf Arab stock markets have been slow to introduce futures and options. As a result, some have asked investment banks to design over-the-counter options for individual stocks.

Nasdaq Dubai originally launched equity derivatives in 2008, but this coincided with the global financial crisis, and trading failed to gain critical mass. Activity petered out after 2011. In May 2014, however, international index compiler MSCI upgraded the UAE to emerging market status, attracting a new inflow of foreign capital.

Commenting on the news, Essa Kazim, governor of DIFC and chairman of DFM, said: “The launch of Saudi equity futures in Dubai is a milestone for investors that creates new opportunities for them to play an active role in the region’s dynamic economy. Dubai will continue to strengthen its capital markets connections regionally and globally as well as its product offerings catering for all segments of the market.”

Abdul Wahed Al Fahim, chairman of Nasdaq Dubai, added: “Our Saudi equity futures market is built on collaboration with a wide variety of regional and international market participants as well as extensive analysis of investors’ needs. Together we have created a market that offers easy access and efficiency combined with excellent trading and post-trading services.”