DFM unveils new avatar, but will that improve liquidity?

The Dubai Financial Market (DFM) today launched its new corporate identity – a new logo – to reflect what the exchange terms as “the strategic direction and growth of DFM going forward” in a bid to prepare the bourse “for a new era of sustainable growth”.

“As one of the fastest growing exchanges in the Mena region over the last decade, the evolutionary corporate identity has been inspired by DFM’s drive to maintain its leading position and proactively respond to the mounting challenges in business,” the bourse said in a media statement.

That tag – of being “one of the fastest growing exchanges” in the region – may be a tad unsuitable already. With no new initial public offering (IPO) on the exchange since mid-2008, liquidity too has dried up, with average daily turnover falling to $36.15million this year (to date), down more than 91 per cent from an annual peak of $407.93m in 2007.

The average turnover has been on a downward spiral ever since, falling to $336.65m in 2008, $190.24m in 2009 and just $75.2m last year.

The DFM’s board endorsed the new vision and mission of the exchange in September 2011, reflecting what the bourse says is the directors’ “ongoing effort to lead the strategic growth of DFM and reinforce its numerous competitive advantages and capabilities”. But will that boost liquidity?

International, regional and local investors have seen share prices plummet in the face of the ongoing global financial crisis, and investment sentiment in local equities seems to be at an all-time low. This has seen a number of UAE share brokerages shut shop or aim for consolidation, with Dubai-based Shuaa Capital announcing another phase of cost-cutting and job-losses last week in the face of plummeting share trade and mounting losses.

“The financial services industry witnessed extraordinary market disruptions in September and significant changes to the competitive landscape. These events led to a very difficult operating environment, predominantly in the brokerage business,” Shuaa said in its latest results announcement.

“Uncertainty caused by the European debt crisis and the rapidly changing political landscape in the Arab region has further impacted sentiment towards capital markets,” it added. “The macro environment has forced many financial service providers in the MENA region to re-evaluate their business models leading to some domestic and international players ceasing operations,” it said.

To be fair, the DFM has been scouting for steps to boost liquidity on the exchange, with a cross-listing tie-up with the Egyptian exchange one of those steps. The move, announced in May this year, allows companies to cross-trade on the DFM as well as Egypt’s benchmark index. The framework, designed particularly for companies with operations in both countries, is aimed at boosting liquidity and giving investors more diversity, the exchanges hope.

In that light, DFM’s new slogan – Connecting Liquidity – seems rather apt, but is still more of an aspiration for the exchange than a reality. “Our slogan encapsulates the essence of our personality as a world-class regional marketplace. It underpins our fundamental approach to providing a vibrant exchange characterized by liquidity, innovation and strategic partnerships,” Essa Kazim, DFM’s Managing Director and CEO, said in today’s media statement.

DFM’s new corporate Vision is to be ‘The World Class Regional Marketplace’, with the Mission to ‘offer stakeholders innovative services in conducting trading, clearing, settlement and depository of securities, in an efficient, transparent and liquid environment’. The new Vision and Mission are summarized by five key values which govern the exchange’s behavior internally and externally including: Transparency, Efficiency, Confidentiality, Innovation and Integrity.

“Our corporate identity is inspired by the outstanding success over the last decade and the commitment to building upon our achievements to materialise the Government of Dubai‘s vision to transform the emirate into the leading financial hub across the MENA region,” Kazim said. “Based on this vision, the new corporate identity is driven by unrestricted ambition and commitment to international excellence,” he said.

“Meanwhile, our new logo is purely symbolizing what Dubai and DFM stands for as we are deeply committed to our roots whilst looking forward to the future with confidence, open minds and optimism. Therefore, the new logo constitutes an evolution of the old logo by retaining the well-established sphere graphic and Islamic symbol which has been widely recognized by our participants over the years, in addition to our corporate colors blue and grey. Through our new logo, we have abbreviated the full name of our exchange to the well-known DFM brand name and updated the typeface to modernize and increase the visibility of the logo”, Kazim added.

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