HSBC First Foreign Bank To Get UAE Trading Licence

Source : The Business Times, October 1, 2007

(DUBAI) HSBC Holdings has become the first international bank to get a licence to trade shares on the United Arab Emirates' two domestic stock exchanges as it seeks to expand in the second-biggest Arab economy. 'The Middle East is high on the radar of institutional investors around the world,' Neil Foster, the bank's head of global markets for the Middle East, told a press conference yesterday.

HSBC Middle East Securities, 49 per cent owned by HSBC, the maximum permissible under UAE law, plans to start buying and selling shares on the Abu Dhabi Securities Market and the Dubai Financial Market this year. It will trade for institutional clients before adding services for retail customers next year.

The UAE.'s two domestic exchanges have a combined market value of US$161 billion, bigger than Ireland, as the federation's economy expands nearly 10 per cent a year, data compiled by Bloomberg show. Regulators allow companies including Emaar Properties, the Middle East's biggest developer, to sell stakes of as much as 49 per cent to international investors.

HSBC already buys and sells shares in 10 Middle Eastern markets for its institutional clients through third-party brokerages, although a local licence gives it 'greater control' of such operations, Mr Foster said. HSBC aims to turn this 'into a regional business' and is speaking to regulators in other countries for similar permits.

Investors from Latin America to Japan are seeking to buy Persian Gulf stocks to tap the region's petrodollar-fuelled economic growth, Guillaume Hannebelle, Citigroup's head of Middle East equities distribution, said in a June interview. Two years ago, international interest in the stocks was 'virtually zero' because few were open to foreign buyers and information disclosure was limited, he said.

Institutional investors hold about 30 per cent of the shares in Middle Eastern stock markets, which have a combined value of about US$1 trillion, Irfan Muzzammil, chief executive officer of HSBC Securities, told reporters. - Bloomberg