Bank of London and the Middle East’s (BLME’s) intention to list on Nasdaq Dubai is raising hopes that it will help resuscitate the exchange.

With only seven stocks on offer, mostly illiquid, apart from ports operator DP World and interiors company Depa, Nasdaq Dubai saw its trading volumes dry up following the crisis. 

But rather than being driven by renewed confidence, the choice for Nasdaq Dubai is largely formed through a combination of circumstances. Because the Islamic bank is not raising additional capital it is not eligible to list on the London Stock Exchange or Dubai’s larger stock exchange, the Dubai Financial Market (DFM). As most of its investors are based in the region – primarily Kuwait – it makes sense to opt for Dubai’s other exchange, Nasdaq Dubai.

BLME’s fundamentals and planned stock pricing will likely appeal to investors. Concerns still remain about how actively it will be traded following what will be the first listing for the exchange in five years.

It may also not be enough to attract more companies to list. Even the UAE’s larger exchanges, DFM and Abu Dhabi Securities Exchange, are frequently passed over for a listing on London Stock Exchange instead, which helps put their profiles on the radar of international investors.

Plans announced by the government to merge Nasdaq Dubai and DFM would make sense to create a larger liquidity pool. For the moment, though, there seems to be little movement towards actually realising them.

In the meantime, Nasdaq Dubai exploring possibilities to form a new market for small and medium-size enterprises shows it is actively looking at ways to boost its activity. Again the challenge will be to urge companies to list, attract investors, and ultimately form a sufficiently liquid market.