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Dubai International Financial Centre (DIFC) announced that it aims to set up an alternative stock market for small-to-medium (SME’s) sized firms in a bid to create more exit options for the region’s private equity sector. The DIFC’s chief economist said that “to private equity investors this increases the exit mechanisms and exit opportunities”.

 

July 20, 2010

 

 

Analysis and Forecast: Decreasing Risk

 

Scarce details have been provided about the proposed market. However, from the limited information provided, it appears that this is a move intended to consolidate Dubai’s position as the GCC’s main financial centre. Regional competition, particularly from Qatar, has undoubtedly affected the position of Dubai as a financial centre and the financial crash further undermined the emirate’s reputation.

 

Current moves to consolidate operations and the recent announcement that the DIFC plans to set a stock market for SME’s is a positive move and likely to attract investors, if implemented adequately.

 

However, this needs to be accompanied by clarifications on governance structures for it to realize its potential in contributing to the revival of the Dubai economy.