Dubai Financial Market

Investor Presentation Sept 2011

CONTENTS :

MENASA Region : Macroeconomics Dubai : Middle Easts Financial Hub

. 1 . 6

UAE Capital Markets : DFM / ND / ADX

Two Exchanges, One Market : DFM & ND Corporate Strategy : Going Forward

. 10
.... .... 17 27

UAE : AN ECONOMIC POWERHOUSE

THE REGION MENASA / GCC/ UAE

AN ECONOMIC POWERHOUSE

2
Menasa regions is emerging as a powerful economic bloc with tremendous growth potential, combining the sovereign wealth funds (SWFs) of the Mena region to the economic growth story of, say, India, hence, the economic paradigm shift towards this region from other emerging markets.

MENASA REGION : SOLID ECONOMIC FUNDAMENTALS -PROMISING GROWTH

1,745

Population 2008 (Million)

1,347
59%

1.7 x

Oil Reserves & Production as a % of Global Total

33%
0.8 x 0.1 x 1.1 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

4,248

GDP 2008 (USD Billion)

7% of global GDP
7.1

Expected GDP and Population Growth 9.4 ( 2007 -2014 CAGR - %)

7.3 7.4 10.0
6.0

1,073 542

1,371 836
2.6

426
SOUTH ASIA

1.4

1.5

2.0

6.9 2.2

1.5

1.2

2.7 0.9

MENASA

GCC

NORTH LEVANT IRAN & AFRICA & TURKEY IRAQ

MENASA

GCC

North Africa

Levant
GDP

Iran
Population

South Asia

US

UK

Source: IMF, Global Insight, World Bank, World Market Monitor McKinsey, the World Fact Book and Abraaj Capital.

UAE : MACROECONOMICS

The UAEs strong fundamentals lessened the impact of the global financial crisis

The UAE, the second biggest Arab economy, is set to record 3.4% growth in GDP this year, led by a focus on adopting industrial policies that will drive sustainable development across the UAE.
-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, World Bank

5
Key Contributors to Growth

UAE : GROWTH PROSPECTS

Oil / Gas as % of GDP (2009) Recovery in oil prices Strong growth in the nonhydrocarbon sector UAEs 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

DUBAI : VISION & ECONOMIC STRENGTHS

Our vision is clear, our goals are obvious, our strengths are great, our will is strong and we are ready. We want Dubai to be a global center of excellence, creativity and leadership. Dubai GDP Share Breakdown by Economic Sectors 2009-10
Other, 3.36% Manufacturing, 21.14% Real Estate & Construction, 19.43% Trade, 34.78%

Government Financial Sector, 3.45% Sector, 8.39%

Dubais core strengths remain fundamentally sound

-HH Sh. Mohammed Ruler of Dubai

Well diversified economy based on international trade, banking and finance, tourism, information technology and real estate

Transport, 7.06% Hotel & Restaurants, 2.39%

Strengths
Highly sophisticated financial centre

Reasoning
Dubai is ranked 7th as per International Financial Centres Competitive Assessment Report , 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. -World Bank Index Trade capacity in UAE has tremendously improved over the years with free-zones like JAFZA. Hotel occupancy rates remained high throughout 2010, benefitting both tourism and trade activities. - DSC, 2010 Report

Favorable business environment Strategic location with a strong logistics infrastructure to bolster trade Solid tourism sector
Source : Dubai Chamber of Commerce

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, as per IMF, way above the average GDP growth of western counterparts

While challenges remain, 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. What Dubai is now left with is an unparalleled logistics, commercial, retail, communications and transportation infrastructure in the region - and ready for business in a region that is sitting in a fresh pile of cash thanks to high oil prices.

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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

Dubais 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

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, Index & Commodity Futures

11
DFMs 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, 16.7 DFM, 55.5

114.6

138.7

84.6

15.1

37.2

86.9

83.4

70.5

2002
Source : DFM/ND Analytics

2003

2004

2005

2006

2007

2008

2009

2010

2011

72.2

9.9

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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 - 2010

TRADED VALUE (2002 2010) USD Billions

ADX BSE QE DFM KSE MSM ND

2006

2007

2008

2009

2010

110.4

103.4

13.9

94.8

83.8

48.1

2002

2003

1.1

0.8

2004

2005

2006

2007

2008

2009

2010

Source : DFM/ND Analytics

20.3

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MARKET VELOCITY DFM PERFORMANCE

VELOCITY (2002 2010)
96.4%

109.1% 100.5%

74.5% 62.5%

37.3%
28.0% 7.7% 7.2%

2002

2003

2004

2005

2006

2007

2008

2009

2010

* Velocity = Annualized Trade Value / Average Market Capitalization

Source : Arabian Monetary Fund

DUBAI FINANCIAL MARKET | NASDAQ DUBAI

TWO EXCHANGES, ONE MARKET

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 %
79.62%

33.33%

19.9%

1%
19.38%

66.67%

Public Stake

16
Opening doors to a list of world class products and services to both local and foreign investors

DFM :TWO EXCHANGES, ONE MARKET

THE CONCEPT

Issuers have the option to list on DFM or NASDAQ Dubai based on capital raising and regulatory needs.

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.

Trading

More than half a million retail investors brought together with worldwide institutional investors.

Investing

Dubai Investor Pool

DFM

ND
13 22 32

LISTINGS

EQUITIES / FUNDS INDEX FUTURES DEBT / SUKUKS

80 7

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Index movement remained flat between 2010-2011

DFM : GENERAL INDEX

YTD PERFORMANCE

52 WEEKS INDEX PERFORMANCE

1900

1800

1700

1600

1500

1,431.71

1400

1300

Source : Reuters

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Trading Activity : Client type Mix

DFM : TRADING PROFILES

RETAIL VS. INSTITUTIONAL MIX

100.00% 80.00% 60.00% 40.00% 20.00% 0.00%

YTD 2011 TRADING ACTIVITY PATTERN

AVERAGE RETAIL TRADING = 71.7%

AVERAGE INSTITUTIONAL TRADING = 28.3%

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

14.60%

22.40%

20.90%

22.40%

Growth movement is seen among institutional investors with 2011 YTD recording 28% market share
Source : DFM / ND Analytics

29.30%

28.30%

85.40%

77.60%

79.10%

INSTITUTIONAL 77.60% 71.70% RETAIL

2006

2007

2008

70.70%

2009

2010

YTD 2011

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UAE VS. NON UAE TRADING ACTIVITY

DFM : TRADING ACTIVITY

LOCAL VS. 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

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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

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Distribution of Share Ownership in 2010 2011

DFM : OWNERSHIP

SHARE OWNERSHIP RATIOS

BY TYPE OF INVESTOR

BY NATIONALITY
2.59% 4.16% 4.47%

Arab GCC Others

Retail 36.36%

Institutions 63.64%
88.78%

UAE

FOREIGN OWNERSHIP AS % OF MARKET CAPITALIZATION

13% 10% 8% 12% 12% 12%

2006

2007

2008

2009

2010

2011

Foreign Ownership

22

DFM Share Price Movement YTD 2010- 2011

DFM SHARE PRICE

DFM : MARKET ACTIVITY

0.2 2

0.4

0.6

0.8

1.2

1.4

1.6

1.8

AED

AED 1.09

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

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Revenue Breakdown 2008-2010

DFM : REVENUE MIX

4.8%

6.3%

11.3%

18.4%
32.0% 28.5%

DFM is actively moving towards revenue diversificati on with 2010 witnessing 40% revenue from diversified portfolio

75.3% 63.2%

60.2%

2008

2009

2010 Other Income

Trading Fee & Commisions

Investment Income

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

UAE : AN ECONOMIC POWERHOUSE

CORPORATE STRATEGY

DFM - ND

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

27
Key criteria's for Emerging market status

STRATEGIC INITIATIVES MSCI UPGRADE

CRITERIA
A. ECONOMIC DEVELOPMENT A.1 Sustainability of economic development

Emerging
No requirement

DFM / ND
Strong economic fundamentals with expected GDP growth of 4% for 2011

B. SIZE AND LIQUIDITY REQUIREMENTS 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.1 Openness to foreign ownership C.2 Ease of capital inflows/outflows C.3 Efficiency of operational framework 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

28
Delivery Vs. Payment : Implementation

STRATEGIC INITIATIVES G-30 COMPLIANCE

UNCHANGED
1. T+2 cycle; settlement

CHANGED
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]. 2. Enhancing current rejection process for settlement of purchase trades; 3. 4. a. b. c. 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. Cash close out against the Local Custodian client [if mandatory buy-in against selling Broker by DFM fails on T+4]. Penalties for Late Confirmation.

DvP methodology has been successfully implemented at DFM as of May 2011

2. Pre-validation of sell orders will be maintained. This means a sellers agent trading account with local custodian must have securities balances for prevalidation before a sell order can become a valid order.

5.

1. Reduce risk in Local Brokers having unlimited access to the Local Custodian Client Agent Trading Account. 2. Eliminate the requirement to use a dual account structure. 3. Progression in meeting international best practices under a pre-validation of sale market infrastructure. 4. Facilitate the achievement of Emerging Market status under the MSCI market classification.

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

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.

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

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.C.

Free accessibility of international investors

ii

CONTACTS :

Soheib Ghizali

AVP, Investor Relations

Areej Al Saeed

Office Manager Executive Chairman's Office

P.O.Box: 9700, Dubai, UAE Tel: +971 4 305 5607 Fax: +971 4 331 4924 aalsaeed@dfm.ae

P.O.Box: 9700, Dubai, UAE Tel: +971 4 305 5226 Fax: +971 4 331 4924 sghizali@dfm.ae