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The tie-up is in line with the bankÆs strategy to expand its securities services business in the Middle East.
Standard Chartered now provides full custody services in three markets in the Middle East, including the Dubai International Financial Exchange and the Dubai Financial Market.
The Middle East is considered among the hottest destinations for investors. Its markets collectively boast a capitalisation of around $1 trillion. Not surprisingly, they are attracting rising investor numbers thanks to easy liquidity access and the regionÆs own overflowing wealth and inward investment.
Global bank HSBC has traditionally ruled the roost as the only sub-custodian offering services throughout this region. Rival Standard Chartered however says it intends to capitalise on the increased demand for asset servicing.
ôThe general trend in the Middle East is for increased liberalisation and IPO activity,ö says Giles Elliott, global head of product, securities services at Standard Chartered Bank. ôEconomies in this region are benefitting from high oil prices and petro dollars. The Saudi Arabia government also recently announced plans to further open up its market to foreign investors. This spells increased opportunities for us and therefore there is also greater capacity for more players in the region.ö
The bankÆs expansion of its team on the ground also attests to this growth trend. Standard Chartered has doubled its custody team in the UAE from 6 to 12 staff over the past six months; it said it plans to add to this number but declined to give specifics.
This year the Gulf countries have continued to enjoy net inflows from foreign institutional investors. Money is flowing into the region; this in turn leads to a need for securities to be processed, cleared and settled.
Some of these markets allow 100% foreign ownership, and even those which do not, such as Saudi Arabia which is by far the regionÆs largest market, now allows funds domiciled in the Gulf to invest, opening the door to global investors.
Another benefit is the fact that while many emerging markets impose taxes on dividends and capital gains, this is not the case in most of the Middle East. Market participants say this also helps to enhance returns to investors.
The bank says it will provide a full range of sub-custody and securities clearing services, including settlement, safekeeping services, corporate actions and market information.
The Abu Dhabi Securities Exchange serves the domestic cash equity market. It has 65 listed companies with a market capitalisation of $134 billion as of end-June.
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