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Dubai Financial Market

Investor Presentation Sept 2011

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CONTENTS :

MENASA Region : Macroeconomics Dubai : Middle East‟s Financial Hub

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UAE Capital Markets : DFM / ND / ADX
Two Exchanges, One Market : DFM & ND Corporate Strategy : Going Forward

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UAE : AN ECONOMIC POWERHOUSE

THE REGION – MENASA / GCC/ UAE
AN ECONOMIC POWERHOUSE

745 Population 2008 (Million) 1.073 542 1.8 x 0.4 10.2 2.1 x 38 MENASA GCC 158 15% 17% 1% 99 103 Iran SOUTH ASIA MENASA North America Oil Reserves 8% 9% 8% NORTH LEVANT IRAN & AFRICA & TURKEY IRAQ Europe Oil Production South America 4. the World Fact Book and Abraaj Capital.347 59% 1.1 x 1.9 MENASA GCC NORTH LEVANT IRAN & AFRICA & TURKEY IRAQ MENASA GCC North Africa Levant GDP Iran Population South Asia US UK Source: IMF.2 1. the economic paradigm shift towards this region from other emerging markets.2 Menasa regions is emerging as a powerful economic bloc with tremendous growth potential.0 6.7 0. combining the sovereign wealth funds (SWFs) of the Mena region to the economic growth story of.0 6.4 1.5 1.5 2.%) 7. . MENASA REGION : SOLID ECONOMIC FUNDAMENTALS -PROMISING GROWTH 1.248 GDP 2008 (USD Billion) 7% of global GDP 7.371 836 2. hence. Global Insight.9 2. India. say.4 ( 2007 -2014 CAGR .7 x Oil Reserves & Production as a % of Global Total 33% 0. World Bank.1 Expected GDP and Population Growth 9.3 7. World Market Monitor McKinsey.0 1.6 426 SOUTH ASIA 1.

the second biggest Arab economy. is set to record 3. -IMF 2011 Forecast • • UAE is leading venue for FDI in MENA after Saudi Arabia UAE is ranked 22nd globally for Value of Imports and 21st for Exports The UAE ranked 3rd in the world for „quality of infrastructure‟ • Top Destinations for Foreign Direct Investment in MENA (2010) $150 $120 $90 $60 Billions $30 $Saudi Arabia UAE Egypt Qatar Source: IMF.4% growth in GDP this year. World Bank .4 UAE : MACROECONOMICS The UAE’s strong fundamentals lessened the impact of the global financial crisis The UAE. led by a focus on adopting industrial policies that will drive sustainable development across the UAE.

5 Key Contributors to Growth UAE : GROWTH PROSPECTS Oil / Gas as % of GDP (2009) • Recovery in oil prices • Strong growth in the nonhydrocarbon sector • UAE‟s service driven economy benefitting from the global trade • USD 50 billion worth of infrastructural projects still under construction in UAE UAE Trade Projections BAHRAIN OMAN SAUDI ARABIA UAE QATAR 21% 41% 41% 45% 61% UAE Import/Export Projections Source: Dubai Chamber of Commerce .

THE FINANCIAL HUB OF MIDDLE EAST DUBAI .

our goals are obvious. 3. Mohammed Ruler of Dubai Well diversified economy based on international trade. 34. a competitive study of 15 key global and regional financial centres done by KPMG Dubai has been rated very high in ease of doing business ranking 33rd globally. tourism. 21. 7. 19.7 DUBAI : VISION & ECONOMIC STRENGTHS “Our vision is clear.43% Trade. creativity and leadership”.78% Government Financial Sector.36% Manufacturing. 2010 Report Favorable business environment Strategic location with a strong logistics infrastructure to bolster trade Solid tourism sector Source : Dubai Chamber of Commerce . .39% Dubai’s core strengths remain fundamentally sound -HH Sh. -World Bank Index Trade capacity in UAE has tremendously improved over the years with free-zones like JAFZA.45% Sector. 2.06% Hotel & Restaurants.39% Strengths Highly sophisticated financial centre Reasoning Dubai is ranked 7th as per „International Financial Centres Competitive Assessment Report‟ . our strengths are great. banking and finance. Dubai GDP Share Breakdown by Economic Sectors – 2009-10 Other. benefitting both tourism and trade activities.14% Real Estate & Construction. our will is strong and we are ready.DSC. We want Dubai to be a global center of excellence. 8. Hotel occupancy rates remained high throughout 2010. information technology and real estate Transport. 3.

8 DUBAI : RECENT EVENTS • Seems like the stars are aligning for Dubai once again Organizational restructuring of government departments & related entities Successful debt restructuring across all sectors with zero defaults GDP is projected to grow at 4% and above going forward. communications and transportation infrastructure in the region . retail. What Dubai is now left with is an unparalleled logistics. way above the average GDP growth of western counterparts • • While challenges remain.and ready for business in a region that is sitting in a fresh pile of cash thanks to high oil prices. as per IMF. the Dubai economy is on a much sounder footing especially as much of the excesses and speculative elements of the economy have been weeded out. . commercial.

8 Globally faster growing sectors DUBAI : GROWTH PROSPECTS Globally fast growing industries with a strong position in Dubai Tourism Financial services Trade Oil and gas Professional services Communication Future global growth 2010– 2015 Manufacturing Transportation and storage Construction Average global GDP growth Electricity/ Water Globally slower growing sectors Agriculture Government services Very weak Average Strong Dubai’s strength by international standards Sectors qualified to be part of future growth path Source : DSP 2015 .

UAE : AN ECONOMIC POWERHOUSE CAPITAL MARKETS UNITED ARAB EMIRATES .

Index & Commodity Futures .10 CAPITAL MARKETS: KEY EXCHANGES IN THE REGION Casablanca Stock Exchange Algiers Stock Exchange Tunis Stock Exchange Istanbul Stock Exchange Damascus Stock Exchange Beirut Stock Exchange Iraq Stock Exchange Amman Stock Exchange Tehran Stock Kuwait Stock Exchange Exchange Qatar Exchange Karachi Stock Exchange Palestine Stock Exchange Libya Stock Exchange Egypt Stock Exchange Tadawul Muscat Stock Market Sudan Stock Exchange Only UAE offer a wide array of trade exchanges/products in the entire MENA region Cash & Fixed Income Equity.

7 DFM.7 84.6 138.2 86.1 37.9 83.6 15.5 2002 Source : DFM/ND Analytics 2003 2004 2005 2006 2007 2008 2009 2010 2011 72.11 DFM‟s performance is in line with other GCC counterparts with combined market capitalization of USD 70.4Bn MARKET CAPITALIZATION LIQUIDITY REVIEW END-OF-PERIOD MARKET CAPITALIZATION (2002 – YTD 2011) USD Billion DFM / ND Markets Breakdown (USD Bn) ND. 55.2 9.5 114.4 70.9 . 16.

12 Thin trading is recorded across all GCC markets in 2010 with average v drop of 40% in trade values as compared to 2009 TRADE VALUES : DFM PERFORMANCE GCC Exchanges 5 Year Comparative & Trend Analysis 2006 .4 13.3 .8 83.1 0.4 103.8 48.2010 TRADED VALUE (2002 – 2010) USD Billions ADX BSE QE DFM KSE MSM ND 2006 2007 2008 2009 2010 110.9 94.8 2004 2005 2006 2007 2008 2009 2010 Source : DFM/ND Analytics 20.1 2002 2003 1.

4% 109.1% 100.3% 28.2% 2002 2003 2004 2005 2006 2007 2008 2009 2010 * Velocity = Annualized Trade Value / Average Market Capitalization Source : Arabian Monetary Fund .5% 37.5% 62.13 MARKET VELOCITY DFM PERFORMANCE VELOCITY (2002 – 2010) 96.0% 7.7% 7.5% 74.

DUBAI FINANCIAL MARKET | NASDAQ DUBAI TWO EXCHANGES. ONE MARKET .

62% 33.15 Regulatory Authorities Stock Exchanges UAE MARKETS : REGULATIONS & OWNERSHIP SCA (UAE Regulations) DFSA (International Regulations) ADX DFM NASDAQ Dubai Ownership Structure Government of ABU DHABI 100 % 79.38% 66.67% Public Stake .33% 19.9% 1% 19.

ONE MARKET THE CONCEPT Issuers have the option to list on DFM or NASDAQ Dubai based on capital raising and regulatory needs. Investing Dubai Investor Pool DFM ND 13 22 32 LISTINGS EQUITIES / FUNDS INDEX FUTURES DEBT / SUKUKS 80 7 . Trading More than half a million retail investors brought together with worldwide institutional investors. Listing Dubai Listing SCA DFM DFM Members OR Common Members DFSA NASDAQ Dubai ND Members Common Members use the same trading systems and can view DFM stocks and ND stocks on one screen.16 Opening doors to a list of world class products and services to both local and foreign investors DFM :TWO EXCHANGES.

71 1400 1300 Source : Reuters .17 Index movement remained flat between 2010-2011 DFM : GENERAL INDEX YTD PERFORMANCE 52 WEEKS INDEX PERFORMANCE 1900 1800 1700 1600 1500 1.431.

7% AVERAGE INSTITUTIONAL TRADING = 28.60% 71.18 Trading Activity : Client type Mix DFM : TRADING PROFILES RETAIL VS.60% 79.70% RETAIL 2006 2007 2008 70.00% 40.40% Growth movement is seen among institutional investors with 2011 YTD recording 28% market share Source : DFM / ND Analytics 29.60% 22.3% 06/01/2011 16/01/2011 26/01/2011 05/02/2011 15/02/2011 25/02/2011 07/03/2011 17/03/2011 27/03/2011 06/04/2011 16/04/2011 26/04/2011 06/05/2011 16/05/2011 26/05/2011 05/06/2011 15/06/2011 25/06/2011 05/07/2011 15/07/2011 25/07/2011 04/08/2011 14/08/2011 24/08/2011 03/09/2011 13/09/2011 23/09/2011 TRADING ACTIVITY BY CATEGORY 14.70% 2009 2010 YTD 2011 .90% 22.10% INSTITUTIONAL 77.30% 28.00% 60.00% YTD 2011 – TRADING ACTIVITY PATTERN AVERAGE RETAIL TRADING = 71. INSTITUTIONAL MIX 100.00% 0.40% 77.00% 80.40% 20.30% 85.00% 20.

FOREIGN INVESTMENT 31% 30% 37% 40% 44% 50% 69% 70% 63% 60% 56% 50% 2006 2007 2008 UAE 2009 Non-UAE 2010 2011 5% 12% 17% 18% 12% 15% 23% NON UAE TRADING ACTIVITY 12% 9% 2006 14% 5% 2008 GCC 22% 6% 2009 23% 21% 6% 2011 6% 2007 6% 2010 OTHERS OTHER ARABS Source : Reuters / DFM / ND Analytics . NON UAE TRADING ACTIVITY DFM : TRADING ACTIVITY LOCAL VS.19 UAE VS.

20 Trade Activity – By Sector 2010 DFM : TRADE MATRICES SECTOR MIX 2% 2% 11% 5% 14% Banks Financial Services Real Estate and Construction Telecommunicatiion Transportation Others * 66% * Includes Materials / Insurance / Utilities / Consumer Staples .

21 Distribution of Share Ownership in 2010 2011 DFM : OWNERSHIP SHARE OWNERSHIP RATIOS BY TYPE OF INVESTOR BY NATIONALITY 2.16% 4.64% 88.59% 4.78% UAE FOREIGN OWNERSHIP AS % OF MARKET CAPITALIZATION 13% 10% 8% 12% 12% 12% 2006 2007 2008 2009 2010 2011 Foreign Ownership .36% Institutions 63.47% Arab GCC Others Retail 36.

8 AED 0 1 AED 1.8 1.4 1.4 0.2 2 0.09 3/10/2010 10/10/2010 17/10/2010 24/10/2010 31/10/2010 7/11/2010 14/11/2010 25/11/2010 6/12/2010 13/12/2010 20/12/2010 27/12/2010 3/1/2011 10/1/2011 17/01/2011 24/01/2011 31/01/2011 7/2/2011 14/02/2011 22/02/2011 1/3/2011 8/3/2011 15/03/2011 22/03/2011 29/03/2011 5/4/2011 12/4/2011 19/04/2011 26/04/2011 3/5/2011 10/5/2011 17/05/2011 24/05/2011 31/05/2011 7/6/2011 14/06/2011 21/06/2011 28/06/2011 6/7/2011 13/07/2011 20/07/2011 27/07/2011 3/8/2011 10/8/2011 17/08/2011 24/08/2011 5/9/2011 12/9/2011 19/09/2011 26/09/2011 Trade Volume YTD 2010 .2 1.22 DFM Share Price Movement YTD 2010.2011 DFM SHARE PRICE DFM : MARKET ACTIVITY 0.6 0.6 1.

3% 63.2% 2008 2009 2010 Other Income Trading Fee & Commisions Investment Income .0% 28.8% 6.3% 18.4% 32.3% 11.2% 60.23 Revenue Breakdown 2008-2010 DFM : REVENUE MIX 4.5% DFM is actively moving towards revenue diversificati on with 2010 witnessing 40% revenue from diversified portfolio 75.

24 DFM : INVESTOR-CENTRIC ATTRACTIVE PLATFORM FOR LOCAL & INTERNATIONAL INVESTORS • • • • Easy accessibility No income and capital gains tax Non-restricted repatriation of capital Minimal foreign exchange risk • • • • Foreign ownership allowed for most listed companies Diverse base of listed companies Local and international regulatory framework Innovative trading capabilities .

ND .UAE : AN ECONOMIC POWERHOUSE CORPORATE STRATEGY DFM .

26 STRATEGIC INITIATIVES ADDRESSING FUTURE GROWTH • • • Getting upgraded to MSCI Emerging Market Status G30 Compliance and addressing the gaps Organizational restructuring and monetization of financial services Initiating investor –centric services to increase liquidity and trading activities post merger • • IPO focus and listings .

1 Openness to foreign ownership C.2 Ease of capital inflows/outflows C.4 Stability of the institutional framework 33.5% Significant Significant Good & tested Modest (Current Foreign Ownership – 12%) 49% Significant Good & tested * Good * * Successful DVP implementation and introduction of SBL as part of G30 compliance .1 Sustainability of economic development Emerging No requirement DFM / ND Strong economic fundamentals with expected GDP growth of 4% for 2011 B.1 Number of companies meeting the following standard index criteria 3 USD 873 Mn USD 436 Mn 15% ATVR 12 USD 71 Bn USD 17 Bn DFM is ready and meets all eligibitly criteria's for MSCI upgrade to Emerging market status i) Company size ( Full market cap ) ii) Security size ( Float market cap ) iii) Security liquidity C. MARKET ACCESSIBILITY CRITERIA C.3 Efficiency of operational framework C. SIZE AND LIQUIDITY REQUIREMENTS B.27 Key criteria's for Emerging market status STRATEGIC INITIATIVES MSCI UPGRADE CRITERIA A. ECONOMIC DEVELOPMENT A.

T+2 cycle. Facilitate the achievement of Emerging Market status under the MSCI market classification. DvP methodology has been successfully implemented at DFM as of May 2011 2. Penalties for Late Confirmation. . 2. c. 2. 5. 3. Cash close out against the Local Custodian client [if mandatory buy-in against selling Broker by DFM fails on T+4]. Payment : Implementation STRATEGIC INITIATIVES G-30 COMPLIANCE UNCHANGED 1. Permitting Local Custodians ability to reject cash and securities settlement of sell trades back to executing Broker for settlement if Local Custodians do not receive (matched) settlement instructions from clients – Local Custodians now have full control of assets [unnecessary to operate dual accounts]. Enhancing current rejection process for settlement of purchase trades. This means a seller’s agent trading account with local custodian must have securities balances for prevalidation before a sell order can become a valid order. 4. a. 3.28 Delivery Vs. b. Introduction of a Late Confirmation Period of T+4 Securities fails handling mechanisms which comprises: Optional buy-in [between T+2 and T+3] Mandatory buy-in by DFM on T+4. Progression in meeting international best practices under a pre-validation of sale market infrastructure. settlement CHANGED 1. Eliminate the requirement to use a dual account structure. Pre-validation of sell orders will be maintained. 1. 4. Reduce risk in Local Brokers having unlimited access to the Local Custodian Client Agent Trading Account.

29 New organizational structure STRATEGIC INITIATIVES ORGANIZATIONAL RESTRUCTURING DFM Financial Services Business Development DSX ND CSD EXCHANGES • Trading Enhancements • Margin Trading • Equity Swaps • Warrants •Enhanced Brokerage Services • iVESTOR Cards • Dividend Distribution • Market Data Feed • Web Advertizing • Online Subscription • IPO initiatives • e-Reports & e-Services • DVP • SBL • In-house IPO System .

Publication of the „Guide to going public‟ Event hosted by DFM for the launch of the “Guide to going public” for top financial & legal advisors IPO Market Study and meetings arranged with potential IPO candidates (E&Y) DFM hosted high profile event for the 10th anniversary of the exchange to support IPO initiative .30 DFM has commissioned Independent Research Consultants for intensive IPO study STRATEGIC INITIATIVES PIONEERING IPO STUDY Tap into the IPO market and research over 500 companies in the UAE Develop a targeted IPO marketing campaign in 20102011 • Rectifying inconsistencies in the IPO market • Provide IPO outlook for DFM „s shareholders Indentify the top 100 companies in prime position of going public The following initiatives have been taken so far: • • • • The following initiatives are currently planned: • • • • Approach the Free Zones in the Northern Emirates Initiate talks with the DED & JAFZA Initiate talks via the Dubai Chamber of Commerce Nasdaq Dubai Initiative.Regional IPO Market Study and meetings to be arranged with potential IPO candidates.

31 STRATEGIC INITIATIVES ROBUST ENVIRONMENT FOR FUTURE LISTINGS In-depth market intelligence and value added services Robust and reliable trading environment Investor and consumer visibility In-depth IR and trading analysis One of the most liquid markets in the G.C. Free accessibility of international investors .C.

ae .ae P.O. Investor Relations Areej Al Saeed Office Manager Executive Chairman's Office P.Box: 9700. UAE Tel: +971 4 305 5226 Fax: +971 4 331 4924 sghizali@dfm. Dubai. Dubai. UAE Tel: +971 4 305 5607 Fax: +971 4 331 4924 aalsaeed@dfm.ii CONTACTS : Soheib Ghizali AVP.O.Box: 9700.