So that this question has an answer:
The definition of the set $AB$ is as in the question, i.e.
$$ AB := \{ ab \mid a\in A, b\in B\}. $$
Here $ab$ is simply multiplication in $\mathbb{R}$. This set is not the Cartesian product, with the the collection of all ordered pairs $(a,b)$ with $a\in A$ and $b\in B$. I have heard this set referred to as the Minkowski product of two sets (in analogy to the Minkowski sum or difference of two sets, but I am not entirely certain how standard that term is. In any event, the set $AB$ consists of all products of numbers $a\in A$ and $b \in B$. For example if $A = \{ -1, 0, 1\}$ and $B = \{ 1, 2, 3\}$, then
\begin{align}
AB
&= \{ -1(1), -1(2), -1(3), 0(1), 0(2), 0(3), 1(1), 1(2), 1(3) \} \\
&= \{ -3, -2, -1, 0, 1, 2, 3 \}.
\end{align}
Your counterexample looks good (coffeemath gives the argument in a comment), though I would like to suggest what I think is an even easier counterexample: take $A = B = \{ -1 \}$. Note that we may take $M = N = 0$ to be an upper bound of both $A$ and $B$ (we are not asked to take $M$ and $N$ to be least upper bounds, so why make life hard for ourselves?). Then
$$ AB = \{ 1 \}
\qquad\text{and}\qquad
MN = 0. $$
But $0$ not an upper bound of the set $\{1\}$, so we have a counter-example.
As Jimmy R. points out, you might want to consider what hypotheses will make this statement true. The suggestion that $A,B \subseteq (0,\infty)$ seems reasonable. You could probably extend that to all of $\mathbb{R}$ by considering $M = \max\{ -\inf(A), \sup(A) \}$ and $N = \max\{ -\inf(B), \sup(B) \}$.