ADX 'not reliant on foreign funds'

The Abu Dhabi Securities Exchange (ADX) remains in a strong position in the long term because it is not reliant on foreign funds, its CEO said yesterday.

But ADX and other stock markets in the Gulf have been jolted by fears from the repercussions of the global financial crisis although such a bad performance is in sharp contrast with the high growth in the domestic economy and strong results of listed companies, Tom Healy said.

Addressing a conference on Exchange Trade Funds (ETFs), Healy urged equity investors to take a long-term view on the local market and said ADX hopes to attract more stable institutional investors when it introduces ETFs this year.

"Recent stock market performance does not reflect Abu Dhabi's economic strength. Abu Dhabi is in a strong fiscal position and is not reliant on foreign funds. The GDP is expected to continue growing and our listed companies reported positive financial results in the first half of this year," he said.

Healy said the stock exchange is essential for the development and operation of orderly markets and ensures high levels of transparency and disclosure.

He said ADX is seeking to develop innovative investment opportunities to meet the future demands of share holders and support capital growth. "That is why we have an important role to play in the ambitious strategic plan outlined by the Abu Dhabi Executive Council," he said.

"And this is why I urge investors to take a long-term view. Recently we have not been immune to what is going on in global markets but the outlook for ADX-listed companies is healthy. The underlying economies of both the UAE and the GCC region are strong and the outlook for listed firms is robust."

Citing estimates by the International Monetary Fund (IMF), Healy said the economic performance of the GCC was strong in 2007, with real GDP growth standing at around 5.6 per cent. It is projected to pick up to nearly 6.1 per cent this year, he added.

Speaking about ADX's plans to introduce ETF before the end of this year, Healy said such tools are part of the bourse's strategic plans to provide investors with more diverse investment opportunities.

"ETFs are generally less risky than individual equities. They are transparent, very cost-effective, are easy to trade and therefore ideally suited to the dynamics of ADX. As we diversify our product offering, we hope to attract more institutional investors who have a more long-term and stable approach, and can therefore bring more stability to the market," he said. "The long-term economic standing of the Gulf markets relies on diversified investment opportunities to meet the demand of local retail investors and the more long-term institutional investors. ETFs are an excellent starting point to reach this goal."