The first significant step happened in August, when the exchange was brought under a new holding company, Borse Dubai. The more popular Dubai Financial Market (DFM), designed for local companies, was moved under the same umbrella company, reigniting expectations that the two Dubai exchanges would merge.

In another step towards combining the two, in early 2008 the two markets’ regulators, the Dubai Financial Services Authority, which oversees the DIFX, and the Emirates Securities & Commodities Authority, which regulates the DFM, are expected to sign a deal that will eventually allow companies to list on both exchanges. Such a change promises to bring the DFM’s listings and its institutional and retail investors to the DIFX.

Greater exposure to companies and investors beyond the Gulf will come through Borse Dubai’s deal with the US’ Nasdaq, which was announced in September. If the deal goes ahead, it will place the DIFX within a global network of stock exchanges, including Nordic exchange OMX and the London Stock Exchange, and should bring credibility and exposure.

However, by far the most significant development was DP World’s long-awaited announcement in late October to sell 20 per cent of its shares on the bourse. The DIFX has been waiting since its inception for a major Dubai-based company to list shares, to boost volumes and to encourage other listings.

‘The listing is going to be very significant,’ says Salam Saadeh, managing director, capital markets, at Shuaa Capital. ‘It will attract other prime listings.

‘Up to $4,000 million worth of DP World shares are scheduled to list on 26 November, making the share sale the largest in the region to date.

Significantly, they will not also be listed on another exchange. Until now, the DIFX has been dominated by illiquid Islamic bonds and structured products, and shares that are also traded on more active exchanges elsewhere.

‘The listing is not enough [to get the exchange going] but it is a start,’ says Joe Kawkabani, managing director, asset management, at Algebra Capital. ‘The DP World deal shows the commitment from the Dubai government to make the exchange a success. They have not announced a [secondary listing] on another exchange.

‘DP World is taking a bold step, but the company’s strength is expected to attract investors irrespective of the DIFX’s lacklustre performance. ‘Not a lot of people are paying attention to the exchange, they are looking at the company,’ says Saadeh.

However, the success of the DP World offering, which is open to international institutionaland local retail investors, is not assured. Demand for the institutional portion is expected to be overwhelming, thanks to the global reach of the company. However, local investors are not used to shares being priced through the book-building process DP World is using, and which can make shares more expensive than if they were sold at par value.

‘We want to give people in Dubai and the region the opportunity to participate in [DP World’s] growth,’ says Sultan Ahmed bin Sulayem, chairman of DP World and its parent company, Dubai World. ‘We are very keen that [UAE-based retail investors] participate.

‘DP World is expected to be followed by other government-related issues. Officials at local carrier Emirates and property company Nakheel have indicated they will look at an initial public offering.

But more than a few companies will have to list if investors are to be persuaded to open an account on the bourse, says Kawkabani. ‘Investors cannot rely