DGCX volumes reach all-time high of 9.6m contracts

Updated 15 January 2013
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DGCX volumes reach all-time high of 9.6m contracts

Annual trading volumes on the Dubai Gold and Commodities Exchange (DGCX) in 2012 registered a substantial growth of 137 percent from 2011 to reach 9,601,553 contracts. The upsurge in 2012 volumes — the DGCX's highest ever annual volumes since inception — was led by the substantial growth of Indian Rupee and Gold Futures. Traded over a period of 256 trading days, the annual volumes represent a value of $372.83 billion.
The year 2012 also saw the DGCX setting many other records, including the highest quarterly volume of 2,877,392 contracts in the fourth quarter and the highest monthly volume of 1,057,508 contracts in October. DGCX recorded an average daily volume of 37,506 contracts in 2012, an increase of 138 percent against 2011.
As with 2011, currencies drove the majority of 2012 growth accounting for 93 percent of total contracts. Currency volumes reached 8,880,403 in 2012, an increase of 149 percent from the previous year. Indian Rupee Futures dominated currency trading on the DGCX, registering a growth of 171 percent from the previous year to reach 8,638,993 contracts. Currently, DGCX contributes 30 percent of the global total exchange-traded value of Indian Rupee Futures contracts.
Volumes in the precious metal segment registered a 30 percent increase over 2011. Trading in DGCX’s flagship contract Gold Futures touched 552,001 contracts, up 42 percent from last year. During the year, DGCX Gold Futures attracted significant interest from traders in Asian hubs like Singapore, which have substantial gold trading links with Dubai. In the base metal segment, DGCX Copper Futures, the first copper futures contract to be introduced in the Middle East, traded 137,887 contracts since its launch in April 20, 2012. The product is today the third most actively traded copper contract in Asia.
Meanwhile, in December 2012, DGCX traded 900,602 contracts worth $34.4 billion, an increase of 117 percent on 2011. As with the rest of the year, the currency segment led growth, trading 854,034 contracts, up 111 percent from December 2011. The precious metals segment led by Gold Futures also saw a significant increase of 374 percent from the previous year trading 38,052 contracts.
Gary Anderson, CEO of DGCX, said: "DGCX’s exceptional performance in 2012 has been driven by its ability to enhance liquidity in its contracts and widen investor participation. Trading on DGCX has benefited from the rising profile of derivatives as an asset class among regional investors and the growing need to manage currency and commodity price risk in a volatile environment. Over 2013, we will look to expand our product portfolio and further enhance our contracts based on market feedback. With the development of our new trading platform in partnership with global technology provider Cinnober, we are well positioned to meet growing demand."
DGCX received many industry accolades for its growth and product innovation in 2012. Global Banking & Finance Review named DGCX the world's Best Global Commodities Exchange 2012. The Indian Rupee Futures contract was named the Contract of the Year 2012 award by FOW.


Brighter Saudi economic outlook boosted by reforms

Updated 5 min 24 sec ago
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Brighter Saudi economic outlook boosted by reforms

LONDON: Saudi Arabia’s “ambitious” reform program is set to accelerate the Kingdom’s economic growth this year, according to the International Monetary Fund (IMF).
Following discussions with Saudi officials, an IMF team led by Tim Callen reported that growth was expected to pick up this year and over the medium-term “as reforms take hold.” 

It added: “The primary challenges for the government are to sustain the implementation of reforms, achieve the fiscal targets it has set, and resist the temptation to re-expand government spending in line with higher oil prices.”

The report said considerable progress was being made to improve the business climate. Recent efforts had focused on the legal system and business licensing and regulation. The public procurement law that
is being updated had a key role to play in strengthening anti-corruption policies, said the IMF.
Saudi Finance Minister Mohammed bin Abdullah Al-Jadaan said that the statement “confirms the progress made by the Kingdom’s government in implementing economic and structural reforms.”
Jean Michel Saliba, Middle East economist at Bank of America Merrill Lynch, expressed some concern that higher oil prices could encourage the government to take its foot off the fiscal prudence accelerator.

 

He said: “The IMF report is in line with our views that, while oil prices allow the Saudi government to support a pick-up in economic activity while minimizing the impact on fiscal balances, the key risk that higher oil prices bring is that medium-term (spending targets) are not adhered to.”
However, the IMF identified several encouraging KSA initiatives. The introduction of value-added tax was said to be a “milestone achievement” in strengthening the tax culture and tax administration of the country. Energy price reforms and the introduction of citizens’ accounts to compensate the less well-off for higher energy/VAT costs were also welcomed.
The IMF said that the Kingdom’s privatization and public and private partnership program, recently approved, should be accelerated.
It said: “A balance is needed between pursuing financial development and inclusion and financial stability. Increased finance for smaller businesses, more developed debt markets and improved financial access especially for women as envisaged under the Financial Sector Development Program will support growth and equality.”
Targeting a balanced budget in 2023 was lauded as being “appropriate,” and the Saudi government was advised to focus on delivering on this objective. “Limiting the growth of government spending would be necessary to achieve fiscal targets,” said the IMF.
Reforms to strengthen the budget process and the fiscal framework, increase fiscal transparency, and develop macro-fiscal analysis were said to be making good progress.
But broadening the coverage of fiscal data beyond the central government would ensure a more complete assessment of the government’s impact on the economy.
“While the public sector can be a catalyst for the development of some new sectors, it is important that it does not crowd out private sector involvement, nor remain a long-term player in markets where private enterprises can thrive on their own,” the IMF said.
The IMF recommended that government policies should focus on sending clear signals about the limited prospects for public employment, easing restrictions on expatriate worker mobility, further strengthening education/training, and continuing to support increased female participation. While progress had been made in increasing data availability, “more needs to be done to ensure that an accurate and timely assessment of economic developments is possible.”
Earlier this month, the ministry of finance published first quarter fiscal indicators that showed the Kingdom — which is making concerted efforts to diversify its oil-reliant economy — has projected a deficit of SR195 billion ($52 billion), or 7.3 percent of gross domestic product (GDP), this year, down from SR230 billion last year. It plans to balance the budget by 2023.
First-quarter revenues reached SR166.3 billion, up 15 percent from the same period last year, the ministry said in a statement.
Non-oil revenues jumped 63 percent to SR52.3 billion, partly due to a 5 percent value-added tax (VAT) that the government introduced in January.
Oil revenues rose 2 percent but the low figure was a result of a change in the way dividends are distributed and a stronger number is expected in the second quarter.
The IMF expects Saudi economic growth to hit 1.7 percent in 2018 after falling into negative territory last year.
A number of big-ticket infrastructure projects such as Jeddah’s new $7.2 billion King Abdulaziz International Airport are expected to bolster economic expansion.
In global energy markets, with crude trading at close to $80 per barrel, leading investment banks have forecast prices could go higher.
Supplies are being squeezed by the collapse of production from OPEC member Venezuela as well as worries about Iranian supplies following President Donald Trump’s decision to reimpose sanctions on Iran.

FACTOID

The IMF expects Saudi economic growth to hit 1.7 percent in 2018 after falling into negative territory last year.