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University of Modern Sciences (UMS)

College of Business Administration

INVESTMENT ANALYSIS
FINA 350
Fall 2015/2016
Assignment 2

Submitted to
Dr. Ismail Abdulsalam
Submitted by
Abdullah Jaber Ahmed Al Hammadi
20132660
Section 3
United Arab Emirates Markets

Dealing in stocks in the United Arab Emirates (U.A.E.) goes back to the early sixties of the past
century when the government established several joint-stock companies. Subsequently, an
unregulated stock market developed there for the exchange of stocks through unspecialized and
unlicensed offices. In the absence of appropriate bases for a full-fledged and well-developed
stock market, such as the lack of suitable mechanisms, controls and transparency, factors that led
to the absence of fairness and wide fluctuations in the pricing of stocks, there emerged a pressing
need to regulate the stock market in such a manner as to ensure proper dealings and protection of
the investors interests through the establishment of sound and modern mechanisms for
determining the fair price of a stock in accordance with the market forces of supply and demand.
Continued efforts pressing for regulation of the stock market resulted in passing the U.A.E. Law
Number 4 for the Year 2000, establishing the Emirates Stock and Commodity Exchange Board.
Thereafter, Dubai Financial Market (DFM) and Abu Dhabi Securities Market (ADSM) were
established in the same year.

Stock and Commodity Exchange Board

The Board assumes a legislative and control role in the stock and commodity exchange market in
the country. It exercises the necessary control and executive functions to discharge its assigned
responsibilities, and facilitates investment of savings and other funds in the stock exchange and
commodity market in a manner that would serve the national economy and ensure interaction
between the forces of supply and demand to determine fair prices and protect investors, as well
as to foster investment awareness in a manner that would realize financial and economic
stability.

Dubai Financial Market (DFM)

Dubai Financial Market was established on 26th March 2000 as a public organization having
independent legal personality. In its first stage, the market plays the role of a secondary market
for the exchange of stocks issued by joint stock companies, as well as the exchange of bonds that
are issued by Government of the United Arab Emirates, any of the local government entities,
public organizations and institutions within the government or investment units issued by local
investment funds or any other local or foreign financial instrument acceptable to the market.

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Abu Dhabi Securities Market (ADSM)

Abu Dhabi Financial Market was established in accordance with Law Number (3) for the Year
2000. It gives the Stock Exchange Market independent legal personality, financial and
administrative independence, as well as the necessary control and executive powers required by
the Market to discharge its functions. The Market was officially inaugurated on 15th November
2000. It works towards securing financial and economic stability and the development and
rationalization of exchange methods in such a manner as to ensure market liquidity and stability.
Management of the Stock Market consists of nine members who are appointed by a Presidential
Decree issued by the Emir of the U.A.E. They are appointed for a three-year term.

Sector Symbol Company


Banking AEIBANK Arab Emirates Investment Bank
CBD Commercial Bank of Dubai
DIB Dubai Islamic Bank
EBI Emirates Bank International
EIB Emirates Islamic Bank
MASQ MashreqBank
NBD National Bank of Dubai
Industry JEEMA Jeema Mineral Water Company
Insurance ALLIANCE Alliance Insurance Company
ARIG Arab Insurance Group
ASCANA Arabian Scandinavian Insurance Company
DIN Dubai Insurance
DNIR Dubai National Insurance & Reinsurance
AMAN Dubai Islamic Insurance & Reinsurance
IAIC Islamic Arab Insurance Company
NGI National General Insurance
OIC Oman Insurance Company (PSC)
Investment DI Dubai Investments
GLOBAL Global Investment House
GGICO Gulf General Investment Company
IFA International Financial Advisors
Services AMLAK Amlak Finance
ARMX Arab International Logistics Company
ARTC Arab Technical Construction Company
EMAAR EMAAR Properties
TABREED National Central Cooling Company
SHUAA SHUAA Capital
UPP Union Properties
Companies Listed in the DFM

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Sector Symbol Company
Banking ADCB Abu Dhabi Commercial Bank
ADIB Abu Dhabi Islamic Bank
BOS Bank of Sharjah
CBI Commercial Bank International
CIB Commercial International Bank (Egypt)
FGB First Gulf Bank FH
Finance House
INVESTB Invest Bank
NBAD National Bank of Abu Dhabi
NBQ National Bank of Umm Al-Qaiwain
RAKBANK RAK Bank
SIB Sharjah Islamic Bank
UAB United Arab Bank UNB
Union National Bank
Hotels ADNH Abu Dhabi National Hotels
NCTH National Co. for Tourism & Hotels
Industry BILDCO Abu Dhabi National for Building Materials
FOODCO Abu Dhabi National Foodstu
ADSB Abu Dhabi Ship Building Co.
AGTHIA Emirates Foodstu & Mineral Water Company
FCI Fujairah Cement Industries
GCEM Gulf Cement
JULPHAR Gulf Pharmaceutical Industries
RAKCC Ras Al Khaimah Cement Co.
RAKCEC RAK Ceramics
RAPCO RAK Poultry & Feeding
RAKWCT RAK White Cement Co.
SCIDC Sharjah Cement & Industrial Development Co.
QCEM Umm Al-Qaiwain Cement Industries
UCC Union Cement Co.
Insurance ABNIC Al-Buhaira National Insurance Co.
ADNIC Abu Dhabi National Insurance Co.
TKFL Abu Dhabi National Takaful Co.
ALAIN Al-Ain Ahlia Insurance
AKIC Al-Khazna Insurance
AWNIC Al-Wathba Insurance
AMAN Al-Dhafra Insurance
EIC Emirates Insurance
RAKNIC RAK National Insurance Co.
UIC United Insurance
UNION Union Insurance
Services ADAVIATION Abu Dhabi Aviation Co.
TAQA Abu Dhabi National Energy Co.
ALDAR Al Dar Properties
ETISALAT Emirates Telecommunications
GMPC Gulf Medical Projects Co.
NMDC National Marine Dredging
OILC Oasis International Leasing
QTEL Qatar Telecom (Qtel)
SUDATEL Sudan Telecommunications
Companies Listed in the ADSM

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Highlights in regional investment

Foreign investors will find unique opportunities in each of the Emirates. Among them are the
following:

Abu Dhabi This, the largest of the Emirates, represents a third of the UAEs economy.
The Abu Dhabi 2030 Strategic Plan seeks to enhance non-oil revenues. One development
is building the worlds largest solar energy plant. Another is to develop the aluminum and
steel industries. The specialized industrial zones arising in Abu Dhabi are expected to
attract more than $35 billion of foreign investment.
Dubai The second largest Emirate is the countrys commercial center. Dubai represents
another third of the UAEs economy, based on the pillars of trade, tourism, real estate and
logistics. Dubais trade revenues constitute 80% of overall non-oil revenues. There are 20
Free Zones in various sectors, providing highly attractive benefits to the many foreign
companies. Ambitious infrastructure projects are a world eye-opener, including Palm
Jumeirah and the tallest tower Burj Khalifa. The retail sector is also a strong driver, with
around 100 shopping malls including the worlds largest, Dubai Mall.
Sharjah Apart from oil exports, the third largest Emirate focuses on food processing,
especially in fertile oases such as Al Dhaid.
Ajman The Free Zones here provide lucrative investment opportunities at lower costs
compared to the Southern emirates and have attracted industrial growth. In addition,
agriculture and fishery are two areas with high potential.
Umm Al Quwain The Emirates sandy beaches surrounded by mangrove forests are a
major attraction to Real Estate developers. Examples of major developments are Iceland
and Dream Park, two of the UAEs largest water parks. A new marina is being planned
on the citys waterfront.
Ras Al Khaimah This Emirate is focusing on diversifying its economy. It is the UAEs
largest cement producer and also home to a flourishing ceramics industry. The Gulfs
first pharmaceutical company is based here.
Fujairah The Emirate has initiated a number of major projects in the energy sector. It is
building two oil refineries with a 300,000 ton capacity and will also be building the new
Habchan-Furaijah oil pipeline.

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Market performance in the United Arab Emirates

Markets in the UAE are strong, and the growing worldwide.

The Dubai Financial Market and the Abu Dhabi Securities Exchange are ranked among the best
performing markets in the world for 2013.

Markets dropped so much since the financial crisis that the upside could only be important. I
would prefer to say that the UAEs markets, the DFM and the ADX, finally caught up with the
good results of the countrys economy.

Businesses (be they real estate, tourism and hospitality, industry, retail or manufacturing) are
booming, supported by strong fundamentals. Investors, seeing that the economy was back on
track, started to have faith in the markets again and soon realised that it was more than a rebound
it was a strong trend from which they could make good profits. Several listed companies were
clearly undervalued, so it was a good opportunity to get a cheap entry ticket.

Other factors have to be taken into consideration as well, such as the upgrade by the MSCI Index
of the UAE markets from a frontier market classification to an emerging market status. This
upgrade, effective May 2014, will automatically attract more international financial institutions
into UAE markets. This announcement created a positive momentum and reinforced investors
confidence.

Future Prospects

Prospects for the UAE Stock Market looks bright due to continuing economic growth, high
volume of local savings, and rising demand for new avenues of investment including shares
UAE is now well established as one of the most important commercial center of the Gulf and
many companies already look forward for trading opportunities. With a wide range of companies
in the UAE, the country is set to be one of the more exciting stock markets in the region.

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References

https://www.adx.ae
https://www.dfm.ae
Abeysekera, S. P. (2001) Ecient Markets Hypothesis and the Emerging Capital Market
in Sri Lanka: Evidence from the Colombo Stock Exchange - A Note, Journal of Business
Finance and Accounting, 28, 249-61.
Ebid, S. (1990) Characteristics and Behavior of UAE Stock Market, Journal of Economic
and Admin-istrative Sciences, 6, 19-61.
Haugen, R. A. (2001) The Inecient Stock Market: What Pays O and Why, Prentice
Hall, 2nd edition.
Moustafa, M. A. (2004) Testing the Weak-Form Eciency of the United Arab Emirates
Stock Market, International Journal of Business, 9, 309-25.

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