Commodities are set to become a major part of regional investment portfolios, driven by significant infrastructure developments, an industry conference was told.

David Rutledge, CEO, 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, had 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.”
Rutledge also observed that the emirate’s leading role in setting up regional commodities exchanges was supported by its world-class financial and banking services, modern IT infrastructure, free movement of capital and a transparent and internationally acceptable regulatory system.”
The increasing importance of such markets as the former CIS states, India, Pakistan and East and Southern Asia had driven 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 accounted for 40 per cent of global oil exports, had now begun to export more complex refined products. The Middle East now accounted for four per cent of global steel consumption with UAE imports touching five million tonnes per year. The UAE also exported 250,000 tonnes of pulses (about one quarter of Middle East imports), most of which was 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. Rutledge emphasised that the emergence of regional commodity exchanges in the region would create opportunities for effective investment in commodities and 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.”