Dubai: Nasdaq Dubai said on Monday it plans to launch equity futures on shares of leading companies of Saudi Arabia to enhance investor interest as the country opens up to foreign investors.
The futures trading on the bourse will begin in the third quarter of 2018 on a date to be announced, Nasdaq Dubai said in an emailed statement.
“The framework that we have built for trading and clearing Saudi futures is based on intensive consultations with regional and international market participants including brokers and potential investors. Our futures will provide further impetus to investment into the Saudi capital markets and help develop new links with market participants,” Hamed Ali, Chief Executive of Nasdaq Dubai said in a statement.
The futures will be offered in companies into petrochemicals, real estate, banking and transport.
“It’s a new product. The institutions already offers these OTC. It’s a new investment tool for retail investors. It will be an opportunity for individual investors to hedge or if they don’t have access to Saudi markets directly,” said Mohammad Ali Yasin, chief executive officer at First Abu Dhabi Bank Securities.
The Tadawul index, which has a market capitalisation of 1.9 trillion Saudi riyals (Dh1.86 trillion), has risen 10 per cent compared to an 8 per cent loss in the Dubai Financial Market General index over the past year.
Industry experts expect tens of billions of dollars to flow into Saudi equities due to a potential upgrade of the market to the MSCI Emerging Markets index, the announcement of which is slated for June.
