Growth of Stock Market in the UAE through Merger: A Comparative Study of GCC Stock Markets

Abstract

In recent years, stock exchanges have increasingly been forming alliances or merging with each other. This study is carried out with the objective of finding out the benefits of having a larger single stock market in the UAE instead of the present two separate markets: Abu Dhabi Securities Exchange and Dubai Financial Market. The study covers a period of five years from 2010 to 2014. This study is based on secondary data collected from various stock exchanges in the GCC. The various stock markets in the GCC are compared against each other on the basis of volume and value of trading, market capitalization, number of shares listed and number of days traded. Then, a similar analysis is carried out with the combined ADX and DFM. It is observed that the merger of ADX and DFM brings in benefits on all these parameters. The study also shows that the merger will benefit all the stakeholders by reducing cost of operations facilitated by the large scale operations, sophisticated technology, single trading platform, one investor number, lower trading cost and earlier break-even. Moreover, through the merger the UAE will be able to attract more local and regional companies which will enhance the revenue, profitability and presence in the region.