Regional Capital Markets are evolving and becoming more efficient, says leading UAE Investment and Merchant Bank

The National Investor provides upbeat assessment, but more is needed for long term healthy development Abu Dhabi, September 15, 2004: The efforts of regulators to reduce bureaucracy and new rules affecting the region’s capital markets are helping the drive for the development of efficient and liquid capital markets, according to leading UAE Investment and merchant bank, The National Investor. “New laws such as the capital markets law in Saudi Arabia represent a huge step forward in the drive to make the markets more efficient. Together with regulatory efforts from influential bodies like the DFSA in Dubai and the BMA in Bahrain, the region’s bureaucratic and regulatory ‘grey areas’ have seen vast improvements, as can be seen with recent successful transactions as the Arabtec Equity IPO and Tabreed Sukuk,” commented Mr. Christian Mouchbahani, Director at The National Investor.

His comments came in a paper developed titled, “The Emergence of regional Capital Markets…Fantasy or Reality”. Developing the theme, Mr. Mouchbahani explained that the developments reflected the region’s markets intent to compete with the more established global bourses. “Crucial to this development is the rise in the role of market practitioners and institutions who are working to increase the levels of understanding and awareness among issuers and investors, but more so are also introducing international market standards and top quality execution practices,” he added. Mr. Mouchbahani went on to explain that while it was true that the regional markets were emerging and becoming more efficient, more was needed to happen. “There is some way to go before regional markets can rightfully compete on international standards, although the right ingredients are in place and the right moves are being taken,” he explained.

Mr. Mouchbahani added that, “the ingredients for success are being put in place or are already there: Investors with liquidity, (ii) Governments, Corporates’ and Families excited about raising capital, (iii) The emergence of regulators and markets; and last but not least (iv) Market practitioners and institutions trying to push investment banking products.

Further evolution in these areas will help the region to develop real and efficient capital markets, Mr Mouchbahani explained. Highlighting key areas for development, Mr. Mouchbahani argued that more institutional investment, increased comfort from corporates and family run businesses to accept fiduciary responsibilities and further investment education will help the region’s capital markets become more efficient. “While retail investors have been key to market growth, like the US capital market, whose cornerstone are institutional investors, the region’s markets need to register an increase in institutional interest to create further liquidity. Before that happens we need to ensure that some governments, corporates and family owned businesses, which have shown interest in the IPO process, become accustomed to providing full disclosure, financial reporting and transparency,” he added.

Mouchbahani also welcomed the government privatization process in the region, adding that, “An open mind about more innovative structures such as securitization, debt convertibles into future equity securities of privatized businesses could help to facilitate and accelerate the process.” “The ’emergence’ of capital markets across the region is gaining pace. ‘Real, efficient and liquid’ markets are becoming a reality and the region’s markets are moving in the right direction,” Mr. Mouchbahani concluded.

Notes to Editors

About The National Investor The National Investor is a leading UAE investment and advisory firm with a distinguished track record in fundraising, advisory services, asset management and private equity investments. The Company is backed by over 60 UAE shareholders who come from the highest echelons of the business and political community. NI is actively involved in investment banking, private equity and asset management. The Company is currently ranked as the leading arranger of public share offerings, having lead managed the largest number of public offerings in the UAE to date (with total transaction value exceeding 2.6 billion AED). NI is also actively involved in the local asset management scene, having launched innovative products such as the first Emirates Real Estate Fund. For more information on the National Investor, please visit the Web site at