Nasdaq Dubai is mulling the launch of a futures market covering Egyptian equities, following the launch of its Saudi equity futures market on Wednesday.
The chief executive officer of the exchange, Hamed Ali, told Zawya in an interview that Nasdaq Dubai will follow up the launch of futures contracts on 12 Saudi equities with the rollout of its United Arab Emirates (UAE) MSCI index next week, a futures contract based on the Saudi market index "this year” and futures products targeting the Egyptian exchange at a later, unspecified date.
He said that the exchange's strategy since its inception was to begin working within a jurisdiction offering single-stock futures, followed by index products and then also target other, regional markets.
"For us, at a high level - this is looking at Nasdsaq Dubai's strategy - Egypt has been one of the main jurisdictions we have been focused on for the past three years," he said, citing some of the agreements already in place between regulators and exchanges that allow dual listings and reciprocal, fast-track access to both markets by brokers.
"We've spent a lot of time in Egypt, we like the Egyptian story overall, we like the assets that we are in discussion with, we like the companies we are in discussion with, so Egypt would be a natural choice for regional selection," Ali said.
"Of course, you have a massive economy, you have a lot of content in Egypt, you have a lot of momentum, drive in Egypt as well. We are big believers in Egypt."
When asked how soon a market for single-stock futures in Egypt could be launched, Ali said: "2019 for us is a futures expansion priority. Right now, the focus is making sure that today's starting point takes off the ground and we achieve the right potential level for Saudi single stock futures before we announce dates for any new market. That does not mean there is no work in progress when it comes to any other markets. So we have a number of templates and there is plenty of time to speak about that in the future."
Nasdaq Dubai initially began offering futures contracts on seven UAE equities in 2016, but Ali said that single stock futures were now available on 29 stocks - 17 UAE companies and 12 Saudi firms.
The 12 Saudi firms on which futures trading commenced on Wednesday are: Saudi Basic Industries Corporation (SABIC); Al Rajhi Bank; Alinma Bank; Almarai Company; Dar Al Arkan Real Estate Development Company; Etihad Etisalat Company; Rabigh Refining and Petrochemical Company; Saudi Arabian Mining Company; Saudi Cement Company; Saudi Electricity Company; Saudi Kayan Petrochemical Company; and Altayyar Travel Group.
In a press release issued on Wednesday, Nasdaq Dubai said the 12 Saudi stocks have a combined market capitalisation of 794 billion Saudi riyals, or $212 billion. This represents around 41 percent of the total capitalisation of the Saudi market, which stood at 1.93 billion riyals at close on Wednesday, according to the Tadawul website.
Alongside the 29 single stock futures contracts now traded on Nasdaq, there are two index futures - one for the Dubai Financial Market, and another for the Abu Dhabi Securities Exchange. A third, based on MSCI's index of UAE stocks, will begin trading next week, Ali said.
(Reporting by Michael Fahy; Editing by Shane McGinley)
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