Dubai opened an exchange on Monday to lure investors and companies from outside the United Arab Emirates. The problem is, there are no stocks to offer.
The Dubai International Financial Exchange, or DIFX, said stocks would not be listed until later this year, when contracts were completed with custodian banks to hold shares on foreigners' behalf. The world's four largest custodians are Bank of New York, State Street, JPMorgan Chase and Citigroup.
"It looks like a non-starter if there are no stocks to trade or custodian banks," said Sharif Atta, an analyst at Emerging Markets Management in Virginia.
However, an Investcom spokesman said his company - a Dubai-based mobile-phone operator that serves eight countries in the Middle East and Africa - would probably be the first to list shares on DIFX.
The Dubai exchange will allow the trading of five securities tracking Western indexes. Germany's Neuer Markt, which existed from 1997 to 2003 as a home for small technology companies, had two stocks trading on its first day.
Mark Mobius, of Templeton Asset Management in Singapore, says once the Dubai bourse meets his standards, he is keen to put money in the region. Arab shares have surged as record oil prices have generated cash to invest.
"We love Arab stocks, but they don't have any custodian banks yet, so we can't invest" on the DIFX, he said.
Custodians provide administration, safekeeping and other services for clients.
- BLOOMBERG
The stock answer? There ain't now
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