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Middle Eastern markets face a long journey, but are accelerating
18 December 2009
Derivative markets in the Middle East remain small by global standards. Yet the most successful products are growing strongly. And, as Hugo Cox reports, this is just the beginning.
Read more:
[derivatives]
[futures]
[options]
[Gulf]
[Dubai]
[United Arab Emirates]
[Abu Dhabi]
[Bahrain]
[Saudi Arabia]
Never has the need for a mature derivatives industry in the Middle East looked greater.
The request by Dubai World, the Gulf’s largest state-owned conglomerate, for a six month moratorium on servicing its debts on November 25 shocked world markets, tipping the FTSE 100 into its largest single day loss since March.
As investors exposed to the region scrambled to hedge themselves against further bad news, they may have noticed that the region’s stock exchanges offer virtually no suitable derivative instruments.
The inadequacy of local risk management routes looks stark in the light of the extreme challenges faced by investors in Dubai. Yet across the entire region, only one exchange, Nasdaq Dubai, offers equity or index futures. And these are limited to one future on the FTSE Nasdaq Dubai UAE 20 index, and a small clutch of futures on 20 UAE stocks.
Perversely, given the events of late...
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