Emirates Securities and

Commodities Market in the

U.A.E.

Student name :
Student id :

Introduction
DFM and ADX are both governed and regulated by the Securities
and Commodities Authority (SCA). SCA has the authority to impose
laws and standards in which DFM and ADX have to comply with.
SCAs role is to ensure that the laws are followed by the exchanges
as well as to protect investors, brokers and listed companies
.rights
On the other hand, NASDAQ Dubai is governed to international
standards by an independent regulator called the Dubai (DFSA),
which is equivalent to the Securities and Exchange Commission in
the U.S. Unlike DFM and ADX, NASDAQ Dubai, located in Dubai
International Financial Centre (DIFC), is an electronic exchange with
.no trading floor
The Dubai Financial Market (DFM) is a stock exchange located
.in Dubai, United Arab Emirates. It was founded on March 26, 2000
As of 2014, there are 67 companies listed on DFM. Most of them are
UAE-based companies and a few others are dual listings for
companies based in other MENA region countries. Foreign
companies are from the following countries: Kuwait, Bahrain, Oman,
.and Sudan. Many companies allow foreigners to own their shares
During 2004 and 2005, there were significant increases in the
volume of shares traded and the share prices of many companies.
However, towards the end of 2005 and through the first few months
of 2006 the bubble burst and share values dropped by around 60%
on DFM, along with similar decreases in most other Persian Gulf
.stock markets
DFM is one of three stock exchanges in the UAE. Abu Dhabi
Securities Exchange (ADX) also lists mostly UAE companies
.and NASDAQ Dubai was set up to trade international stocks

Please note that Emirates Bank International (EBI) and National

Bank of Dubai (NBD) had been merged to form a holding company
to run both entities named Emirates National Bank of Dubai (ENBD),
this merger resulted in cancelling both shares and issuing a new one
listed on the October 16, 2007.[1]
The composition of the phases within the industry lifecycle is an
ever-changing mix. The standard model typically dealt with
manufactured goods, but today's U.S. economy is more an economy
2

of services, either on the industry's outset, or as a natural extension

of a declining-product based model. The advent of the internet alone
is transforming many business models from "things" to people and
services.
A concept relating to the different stages an industry will go
through, from the first product entry to its eventual decline. There
are typically five stages in the industry lifecycle. They are defined
as:
i. Early Stages Phase - alternative product design and positioning,
establishing the range and boundaries of the industry itself.
ii. Innovation Phase - Product innovation declines, process
innovation begins and a "dominant design" will arrive.
iii. Cost or Shakeout Phase - Companies settle on the "dominant
design"; economies of scale are achieved, forcing smaller players to
be acquired or exit altogether. Barriers to entry become very high,
as large-scale consolidation occurs.
iv. Maturity - Growth is no longer the main focus, market share and
cash flow become the primary goals of the companies left in the
space.
v. Decline - Revenues declining; the industry as a whole may be
supplanted by a new one.
Listed companies
Banks

Company title

Symbol

Ajman Bank

AJMANBANK

Al Salam Bank Bahrain (B.S.C.)

SALAM_BAH

Al Salam Sudan Bank

ALSALAMSUDAN

Amlak Finance

AMLAK

Commercial Bank of Dubai

CBD

Dubai Islamic Bank

DIB

Emirates Islamic Bank

EIB

Emirates Investment Bank

EIBANK

Emirates NBD

EMIRATESNBD

Gulf Finance House

GFH

Mashreqbank

MASQ

Ques. 3 The Elliot Wave theory is based on the principle that action
is followed by reaction. Elucidate

The Elliott wave principle is a form of technical analysis that

some traders use to analyze financial market cycles and
forecast market trends by identifying extremes in investor
psychology, highs and lows in prices, and other collective
factors. Ralph Nelson Elliott (18711948), a professional accountant,
discovered the underlying social principles and developed the
analytical tools in the 1930s. He proposed that market prices unfold
in specific patterns, which practitioners today call Elliott waves, or
simply waves. Elliott published his theory of market behavior in the
book The Wave Principle in 1938, summarized it in a series of
articles inFinancial World magazine in 1939, and covered it most
comprehensively in his final major work, Natures Laws: The Secret
of the Universe in 1946. Elliott stated that "because man is subject
to rhythmical procedure, calculations having to do with his activities
can be projected far into the future with a justification and certainty
heretofore unattainable." The empirical validity of the Elliott Wave
Principle remains the subject of debate.
4

common stock.
Intrinsic value is a topic discussed in philosophy wherein the worth
of an object or endeavor is derived in-and-of-itself - or in layman's
terms, independent of other extraneous factors. A stock also is
capable of holding intrinsic value, outside of what its perceived
market price is, and is often touted as an important aspect to
.consider by value investors when picking a company to invest in
Outside of this area of analysis, some buyers may simply have a
"gut feeling" about the price of a good without taking into deep
consideration the cost of production, and roughly estimate its value
on the expected utility he or she will derive from it. Others may base
their purchase on the much publicized hype behind an asset
("everyone is talking positively about it; it must be good!") However,
in this article, we will look at another way of figuring out the intrinsic
value of a stock, which reduces the subjective perception of a
stock's value by analyzing its fundamentals and determining the
worth of a stock in-and-of-itself (in other words, how it generates
.cash)

Dividend Discount Model

When figuring out a stock's intrinsic value, cash is king. Many
models that calculate the fundamental value of a security factor in
variables largely pertaining to cash: dividends and future cash flows,
as well as utilize the time value of money. One model popularly used
for finding a company's intrinsic value is the dividend discount
model. The basic DDM is:

Where:
Div = Dividends expected in one period
r = Required rate of return
One variety of this model is the Gordon Growth Model, which
assumes the company in consideration is within a steady state - that
is, with growing dividends in perpetuity. It is expressed as the
following:

Where:
DPS1= Expected dividends one year from the present = $5
R = Required rate of return for equity investors = 12%
G = Annual growth rate in dividends in perpetuity = 6%
Value of stock = 5 / (12%-6%) = 5/6% = 83.33

Conclusion

Five wave pattern (dominant

trend)

Three wave pattern

(corrective trend)

Wave 1: Wave one is rarely

obvious at its inception. When
the first wave of a new bull
market begins, the fundamental
news is almost universally
negative. The previous trend is
considered still strongly in force.
Fundamental analysts continue
to revise their earnings
estimates lower; the economy
probably does not look strong.
Sentiment surveys are decidedly
bearish, put options are in
vogue, and implied volatility in
the options market is high.
Volume might increase a bit as
prices rise, but not by enough to
alert many technical analysts.

Wave A: Corrections are

typically harder to identify than
impulse moves. In wave A of a
bear market, the fundamental
news is usually still positive. Most
analysts see the drop as a
correction in a still-active bull
market. Some technical
indicators that accompany wave
A include increased volume,
rising implied volatility in the
options markets and possibly a
turn higher in open interest in
related futures markets.

Wave 2: Wave two corrects

wave one, but can never extend
beyond the starting point of
wave one. Typically, the news is
still bad. As prices retest the
prior low, bearish sentiment
quickly builds, and "the crowd"
haughtily reminds all that the
bear market is still deeply
ensconced. Still, some positive
signs appear for those who are
looking: volume should be lower
during wave two than during
wave one, prices usually do not
retrace more than 61.8% (see
Fibonacci section below) of the
wave one gains, and prices
should fall in a three wave
pattern.

Wave B: Prices reverse higher,

which many see as a resumption
of the now long-gone bull
market. Those familiar with
classical technical analysis may
see the peak as the right
shoulder of a head and shoulders
reversal pattern. The volume
during wave B should be lower
than in wave A. By this point,
fundamentals are probably no
longer improving, but they most
likely have not yet turned
negative.

Wave 3: Wave three is usually

Wave C: Prices move impulsively
the largest and most powerful
lower in five waves. Volume picks
wave in a trend (although some up, and by the third leg of wave
research suggests that in
C, almost everyone realizes that
commodity markets, wave five is a bear market is firmly
the largest). The news is now
entrenched. Wave C is typically
positive and fundamental
at least as large as wave A and
analysts start to raise earnings
often extends to 1.618 times
estimates. Prices rise quickly,
wave A or beyond.
corrections are short-lived and 7
shallow. Anyone looking to "get
in on a pullback" will likely miss
the boat. As wave three starts,
the news is probably still bearish,