(DENNIS B MALLARI)
Dubai is among the top 10 most competitive financial centres in the world, Emirates Business has learned.
The emirate’s latest ranking in the Global Financial Centres Index – published by the City of London every six months – represents a quantum leap in Dubai’s status as a centre of commerce. It has moved up at least 12 places since its No22 spot in September 2007 when it also did not feature in any of the top 10 lists broken down by key indicators such as access to capital or infrastructure.
And only a year ago, in the March 2007 rankings, Dubai held the No25 spot ahead of Brussels, Stockholm and Beijing. In September London topped the list with 806 points, Tokyo was ranked tenth with 625 and Dubai had 575 points at No22.
The latest figures for March 2008, revealed exclusively to Emirates Business, suggest that the emirate has seen its score climb at least 15 ranks since 2007.
The index ranks the competitiveness of 46 world financial centres according to research carried out by Gresham College in London and its Z/Yen consultancy. The cities surveyed included Doha, Manama, Mumbai, Wellington, Sao Paulo as well as the Cayman Islands.
The survey – the latest report will be released next month – produces an index ranking each financial centre based on a wide range of issues relating to competitiveness including people, business environment, market access, taxes, infrastructure and general competitiveness. And according to the authors of the report: “The scale and cost of regulation remains the overriding issue of importance to international financial services.”
Dubai’s new status in the top 10 also keeps it well ahead of other competing financial centres in the Middle East. The Dubai International Financial Centre’s chief economist Nasser Saidi attributed Dubai’s rise as a world-class international financial centre to a combination of factors, most importantly investment in the infrastructure of the financial markets, which he says will help Dubai sustain growth into the coming years.
“What the surveys are discovering is that Dubai in particular has put in place legal and regulatory infrastructure that is attracting companies from across the world to provide banking and financial services to the region itself, allowing [the emirate] to deploy its new financial resources in a much more efficient fashion and to be internationally competitive,” Saidi told Emirates Business. “Of course we’ve had oil price booms in the past, in the 1970s and 1980s, but those did not sustain economic growth.”
Saidi added the region itself is growing very rapidly. “It has built up its financial resources at an unprecedented rate over the past five years in international reserves and foreign assets of the countries of the region, as a result of the large current account surpluses that we’ve had.
“Dubai itself is a very open and liberal economy… so it’s a combination of providing the framework but also having the resources,” he said.
“Not only can the companies within the DIFC benefit from the fact that there is new-found wealth and resources, but they can also tap into a pool of talented professionals available now in Dubai,” said Saidi.
Henry Azzam, chief executive officer of the Middle East and North Africa division of Deutsche Bank, said that Dubai’s rise as a hub for banking and finance and capital market activities in the region has made it competitive among the world’s top financial centres.
“The fact that almost all international investment banks and financial institutions are here is an indication that the region’s regulatory infrastructure is in place and work and life conditions are conducive to attract the talent needed to maintain these activities,” Azzam said.
Timeline Dubai Financial Centre
February 2008 Borse Dubai’s takeover of Nordic exchanges group OMX is on course to be completed this month. If the $4.9 billion (Dh18bn) offer succeeds, Borse Dubai will then sell on OMX to United States exchange Nasdaq in return for a stake in the combined business.
December 2007 Dubai government lowered its rent cap in the residential and business sector from 7 per cent to 5 per cent in a move to curb soaring office and housing rents across the emirate.
November 2007 Dubai Ports World floated 20 per cent of its shares on the Dubai Financial Exchange between November 4-15, marking the first time a major domestic company chose to list on the exchange. The move was believed to be the largest initial public offering (IPO) in the region to date.
September 2007 Nasdaq and Borse Dubai, parent company of the Dubai Financial Market (DFM) and Dubai International Financial Exchange (DIFX), agreed to take over Nordic bourse owner and technology firm OMX. Under the deal – which gives Nasdaq a 33 per cent stake in the DIFX – Nasdaq plans to invest $50m and allow Dubai to use its name in the Gulf, North Africa and South Asia.
August 2007 The Dubai Financial Services Authority (DFSA) withdrew the licence of Forsyth Partners Global Distributors Limited (Forsyth) to carry on financial services activities in or from the DIFC after the firm failed to meet the regulatory capital requirements. The move was the first time the authority flexed its muscle.
July 2007 Emirates Bank International and National Bank of Dubai (NBD) on July 2 announced a merger, creating region’s largest lender – in terms of assets – Emirates NBD. The move signaled the possibility of further consolidation in Dubai’s banking sector.
June 2007 Investment banking firm Goldman Sachs opened an office in the DIFC on June 10.
June 2007 Global banking giant Merrill Lynch officially opened its new regional headquarters at the Dubai International Financial Centre (DIFC) on June 20. The Dubai Financial Services Authority (DFSA) awarded the firm a full banking licence in January 2007.
April 2007 DIFC Courts – established in December 2004 – was inaugurated on April 17 as an independent judicial system, raising the bar of legal standards in Dubai and within the region. The Courts have jurisdiction over matters arising within the financial centre.
March 2006 Deutsche Bank opened its Dubai branch in the DIFC to take advantage of opportunities in the region. Deutsche Bank has had an office in Dubai since 2001, became a founding member of the DIFX, and was the first to list products when the exchange launched in September 2005.
March 2006 Global financial services firm Morgan Stanley opened its office in the DIFC, its first in the Middle East and North Africa, on March 26.
September 2005 The Dubai International Financial Exchange, the long-awaited Dubai regional stock market, was launched on September 26. DIFX was established to allow the cross-listing of shares from the region and the world, with trading open to GCC nationals, expatriates and foreigners.
The Big Ones
Top Financial Centres
London, United Kingdom
New York, United States
Hong Kong, China
(Source: City of London/Z/Yen research)
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