Abu Dhabi bourse delays launch of exchange-traded fund

The Abu Dhabi Securities Exchange (ADX) said on Wednesday it was further postponing plans to launch exchange-traded funds (ETFs) due to adverse market conditions.

ADX Chief Executive Tom Healy also told an investment conference in Abu Dhabi that foreign investment in shares listed on the UAE capital's stock exchange had fallen to 3.5 per cent from 9 per cent before the financial crisis deepened last year.

This is the ADX's latest delay in introducing ETFs, investment vehicles that hold assets such as stocks or bonds and trade at almost the same price as the net value of their underlying assets over the course of the trading day.

The investment vehicle is seen as a way of helping to broaden the appeal and improve the sophistication of regional stock markets.

"It is going to happen (but) we can't drive the timing," Healy said. "The market crisis is to be partly blamed, but it will happen."

The ADX had already delayed the launch of ETFs from the end of 2008 to the first quarter of 2009, and then again to April.

Abu Dhabi's benchmark fell 47.5 per cent last year amid a regional stock market slump, as foreign and local investors dumped shares in response to the global financial crisis.

"You can't blame foreign investors... foreign investors will be part of the scene here and it is naive to blame them for the collapse of the market," Healy said. "We should ensure foreign investors are long term and not short-term speculators."

 

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