The Nasdaq Dubai has launched futures trading on shares of 12 Saudi Arabian companies, its first single stock futures outside of the United Arab Emirates. The move aims to diversify financial offerings to regional and international investors, allowing them to both invest in and trade Saudi companies on the Emirati exchange.
The companies now available for futures trading on the Dubai exchange comprise a market capitalization of 794 billion Saudi riyals ($212 billion) and cover sectors including real estate, mining, banks, industrial materials and petrochemicals.
"This is a very good opportunity for investors out of the region to be able to hedge or take positions, long or short, when it comes to Saudi markets," Nasdaq Dubai Chief Executive Hamed Ali told CNBC on Wednesday. "It's a product that complements the current Saudi market, rather than competes with it."
Futures are financial products used to speculate on the price movement of an underlying asset. Going short is betting that a company's share price will fall.
Despiteweakened international confidence in Saudi Arabia after a slew of political controversies over the last year, the Nasdaq Dubai's senior management see promise in the oil-rich kingdom's reform agenda. Ali emphasized his confidence on Saudi Arabia's planned reforms toward a more open economy and remained optimistic on the country's outlook.
Indeed, the kingdom's inclusion in the MSCI emerging markets index slated for this year is expected to attract some $15 billion in passive funds and several billions more in active funds. Investors have pointed to Riyadh's easing of some regulatory requirements and adoption of international best practice procedures as signs of progress.