ECONOMIC DEVELOPMENT - UAE Interact

88UNITED ARAB EMIRATES YEARBOOK 2006ECONOMIC DEVELOPMENT89Abu Dhabi, blessed with over 90 per cent of oil and natural gas reserves inthe UAE, is likely to maintain its focus on upstream hydrocarbon resources anddownstream industrial projects, especially in the petrochemicals sector. It is likelyto continue to exert the greatest influence over the Federation’s public financesand to remain at the forefront of the privatisation process.Manufacturing industry will play an increasingly important role in the nationaleconomy in future. Among reasons for this are the existing availability of basicessentials such as infrastructure and communications, as well as the availabilityof resources to fund the acquisition of the appropriate technology. Moreover, inother sectors, there are limited opportunities for investment.Abu Dhabi Securities MarketNumber of Traded Shares Value of Traded Shares Number of Executed Deals2003 2004 2003 2004 2003 2004Banking Sector 96,535,497 368,808,694 1,633,280,694 7,341,902,392 11,891 32,570Services Sector 24,118,397 129,592,613 1,392,174,040 6,022,297,000 9,355 29,010Industry Sector 102,599,755 416,509,340 264,692,912 1,699,893,486 2,677 17,854Hotels Sector 2,388,776 2,120,720 256,458,801 290,961,845 492 709Insurance Sector 9,559,250 30,126,167 140,356,655 988,600,943 1,019 3,203Total 235,201,675 947,156,864 3,686,963,102 16,343,637,666 25,434 83,346FINANCIAL SECTORThe World Bank’s ‘financial governance effectiveness table’ places the UAE at thetop of Middle Eastern countries with a score of 86.1 per cent, followed by Omanwith 79.3 per cent, Qatar with 78.4 per cent, Bahrain with 75.5 per cent and SaudiArabia with 55.3 per cent. The World Bank defines governance as ‘the set oftraditions and institutions by which authority in a country is exercised’. The highera jurisdiction scores, the better its governance ranking.Confidence in financial regulation in the UAE has helped to spur growth in thecountry’s young but extremely active stock markets. Further development tookplace in 2005, maintaining the unprecedented growth rate of the local investmentmarket that has the been the pattern since the establishment of Abu DhabiSecurities Market, together with Dubai Financial and International Financial Markets.The most recent addition to the financial sector is the groundbreaking DubaiInternational Financial Exchange (DIFX), which opened its doors in September2005 and is accessible to investors worldwide.Banks 44.9%Services 36.8%Industry 10.4%Hotels 1.8%Insurance 6.1%Dubai Financial MarketNumber of Traded Shares Value of Traded Shares Number of Executed Deals2003 2004 2003 2004 2003 2004Banking Sector 28,628,301 94,735,965 1,240,244,799 6,651,049,458 5,368 19,705Services Sector 274,975,888 4,706,278,948 2,330,160,204 40,562,880,120 17,157 175,861Insurance Sector 321,185 4,647,700 6,775,238 155,662,487 96 857Investment Sector 22,310,687 316,457,014 194,310,877 3,084,228,618 2,655 19,551Total 326,236,061 5,122,119,587 3,771,491,118 50,453,820,682 25,276 215,934ABU DHABI SECURITIES MARKETAbu Dhabi Securities Market (ADSM) (www.adsm.co.ae) recorded marked growthin all performance indicators during 2004. Trading volume increased by 343per cent, the number of traded shares rose by 303 per cent and the number ofexecuted deals by 228 per cent, compared to 2003. The number and marketcapitalisation of listed companies have also increased.Trading volume reached Dh16.34 billion, up from Dh3.69 billion at the end of2003. The banking sector ranked first, forming 44.9 per cent of the market’s totaltrading volume. The services sector ranked second with a ratio of 36.8 per cent,followed by the industry sector with a ratio of 10.4 per cent and the insurance sectorwith a ratio of 6 per cent and, finally, the hotels sector with a ratio of 1.8 per cent.The ADSM price index reached 3070.9 points at the end of 2004, an increase of74.8 per cent. Price increases were led by the industry (92.9 per cent increase), andBanks 13.2%Services 80.4%Investment 6.1%Insurance 0.3%