Commodities are set to become a major part of regional investment portfolios, driven by significant infrastructure developments, the CEO of DMCC told an industry conference today.
Dr. David Rutledge, Chief Executive Officer, Dubai Multi Commodities Centre (DMCC) and Director, Dubai Gold and Commodities Exchange (DGCX) told the “Commodities Investment World Middle East 2006” conference that the growing trade in physical commodities, helped by the DMCC and the DGCX, has made Dubai a commodities hub, leading to price discovery and hedging opportunities.
Speaking on "Developments in Regional Commodity Markets," Dr. Rutledge said: "The growth of physical commodity activity generates demand for price discovery and therefore the need for commodity exchanges. With the successful establishment of the Dubai Multi Commodities Centre and the Dubai Gold and Commodities Exchange (DGCX), Dubai has effectively opened the doors to commodities investment in the region."
“As a neutral location that is neither a producer nor the final consumer destination for a majority of commodities traded on the exchange, Dubai is the ideal centre for the price discovery of various commodities. The Emirate’s leading role in setting up regional commodities exchanges is also supported by its world class financial and banking services, modern IT infrastructure, free movement of capital and a transparent and internationally acceptable regulatory system,” he said.
The increasing importance of such markets as the former CIS states, India, Pakistan and East and Southern Asia has driven this growth in the local and regional physical commodities, he added.
Looking across the range of investable commodities, Rutledge explained that gold trading had touched significant levels in Dubai, with annual throughput at more than 500 tonnes, while the Middle East, which accounts for 40 per cent of global oil exports, had now begun to export more complex refined products. The Middle East now accounts for four per cent of global steel consumption he said with UAE imports touching five million tonnes per annum. The UAE also exports 0.25 million tonnes of pulses (about one quarter of Middle East imports), most of which is re-exported.
"Increasingly, these commodities and others such as cotton, sugar, vegetable oil and freight generate a commercial need for price discovery and hedging facilities within the region," he said. Dr. Rutledge emphasised that the emergence of regional commodity exchanges in the region would create opportunities for effective investment in commodities and will provide access to international players also.
Dr. Tilak Doshi, Executive Director for Energy at DMCC also participated in a panel discussion entitled: "Successful strategies for investing in energy products." The session focused on understanding the fundamental drivers of oil and gas markets in the Middle East and identifying suitable investment funds, products and portfolio strategies to gain exposure in addition to discussing strategies to allow investors to benefit from market volatility.
DMCC is one of the official sponsors of the Commodity Investment World 2006 conference, which focuses on several issues including forecasting long-term demand for the most vital commodities and highlighting the key developments in regional commodity markets.
© 2006 Al Bawaba (www.albawaba.com)
