'Allow foreign ownership'

UAE national companies need to tear down barriers for foreign owernship to attract more international capital into the local market, the CEO of Abu Dhabi Securities Exchange (ADX) said yesterday.

Tom Healy said the rapid growth in the domestic economy was already luring foreign investors into the UAE bourses and expected the inflow to increase in the future.

He also said plans to introduce derivatives to ADX were nearly completed and trading in such tools would begin next year.

In an interview with Emirates Business, Healy ruled out a collapse in the UAE stocks despite sharp fluctuations over the past two months, adding such turbulence "is nothing compared to what is happening in global markets".

"If the law on foreign ownership is changed, then we will see a lot of companies coming to this market. We are trying to attract more foreign investors, who are also tempted by the rapid economic growth and high return here," he said.

"But the only problem is the restrictions imposed on foreign ownership, mainly by the national companies in the country. So we would like to see these restrictions lifted or reduced so that foreign firms and individuals can increase their investment further and take advantage of the growing opportunities here ... my expectations in the long turn are that foreign investors will continue to grow."

Asked about plans to introduce derivatives to ADX, he said they are part of an ongoing programme to develop the bourse and expected the project to materialise next year.

"There is no organised derivatives market in the Gulf. We are trying to introduce this type of investment to ADX. The legal framework is there and the authorities have an open mind about this plan. Such things usually take time but we are working on them and let's hope they will materialise sometime next year," he said.

Healy expected ADX to perform better this year, citing a nine per cent growth in the index in the first half and a large increase in foreign dealing to nearly 24 per cent.

He said recent turbulence in the UAE bourses was normal in a stock market.

"There might be some turbulence over the past two month but it is nothing compared to what is happening internationally," he said.

"As for a collapse in the local market, I don't think there will be a collapse in ADX…a collapse could happen to an individual company having problems or with poor outlook and this is not the case here. Again, I say a collapse will not happen here."