Merrill Lynch Launches Dubai Share Index

by Carla Johnson, Investors Offshore.com

14 November 2006

The private client unit of US investment bank Merrill Lynch has launched a new index tracking domestic Dubai shares as part of a strategy to increase its exposure to one of the fastest-growing wealth markets in the world.

Based on the stocks traded on the Dubai Financial Market, Bob McCann, vice-chairman and president of Merrill Lynch's Global Private Client (GPC) group, told a news conference that the Dubai Investible Index (DII) will allow investors to access products linked to the value of the DII.

The new investment product bypasses strict rules concerning foreign ownership of domestic equities, thereby allowing international investors to take part in the DII.

McCann explained that Merrill plans to create and make a market in derivative products linked to the index, which will allow portfolio managers in the Middle East and North Africa to manage their risk more efficiently.

He added that the DII has been created in response to high demand from investors for investment instruments with exposure to the Gulf region. Also with the Dubai market having fallen by two thirds since November after four to five years of strong growth, investors see plenty of value in DFM-traded stocks.

Merrill expects the DII to be popular with both local investors and international hedge fund and money managers looking for simple exposure to the Dubai market.

McCann said that the bank was "excited" about plans to boost its presence in the Middle East through its new hub in the Dubai International Financial Centre (DIFC).

"We see Dubai as a regional hub for the Middle East," he observed.

"We are building a strong non-resident Indian presence here in GPC. We are adding staff to our DIFC office. We will have a number of specialists here in private clients business including trusts, structured products, banking and lending, hedge funds, private equity, real estate and investment banking," he noted.

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