Dow Jones Indexes is to launch an index of the region's top companies, in a bid to encourage investment in the region and discourage capital flight.
Dow Jones Indexes is to launch an index of the top 50 listed companies in the Middle East. The index, called the 'Dow Jones DIFC Arabia Titans 50', may initially look slightly strange, however, since it will omit companies that aren't open to overseas investors. That effectively rules out companies listed in Saudi Arabia and many on the Dubai Financial Market.
The objective of creating the fund, a three way effort between Dow Jones Indexes, Shuaa Capital and Dubai International Financial Centre (DIFC) is to encourage foreign investment in Middle Eastern capital markets and discourage capital flight. To that end, the forthcoming Dubai Regional Exchange, the stock market component of DIFC, will be able to list funds based on the index.
When selecting companies, Dow Jones Indexes says it will look at three primary factors: market capitalisation, turnover and profit.
Government stakes in companies will be discounted when their value on the index is being calculated. Audited results are not obligatory, but Shuaa Capital believes that companies eligible for inclusion in the index are already likely to be publishing credible, audited results.
Whilst Saudi companies will probably be omitted until such time as KSA opens its stock market to foreigners, the index is likely to contain many household names. Emaar Properties, National Bank of Kuwait, MTC of Kuwait and Qatar Telecom were mentioned as companies that would probably make it into the top 50.
The focus of the index will be on the GCC, but companies outside the Gulf may be included. The launch is scheduled for the first quarter of 2004.