ADX rose by 13% in 2009 outperforming most markets

The global fiscal distress wreaked havoc in most markets in the last months of 2008 and its effects continued to reverberate through 2009. It was a hard year for most of them, including the Abu Dhabi Securities Exchange (ADX) although it ended 2009 higher by almost 13 per cent.

The growth has apparently tempted foreign investors, whose net purchase more than doubled in the second half, according to its Deputy Chief Executive and Director of Operations Rashed Al Baloushi.

In an interview with Emirates Business, Baloushi said ADX outperformed most other markets in 2009 and the process of its development would continue.

He supported the creation of a bond market in the UAE and said plans to introduce exchange trade funds (ETFs) to ADX could materialise in 2010. But derivatives could be delayed.


How do you evaluate ADX performance in 2009?

2009 worldwide was a rough and hard year for the exchanges. We see most of them going very unstable and harsh. But if you look at ADX even with this hard environment, we see the index went up by about 13 per cent. Compared with the global markets and even those in the Gulf, we are outperforming most exchanges.

Can we expect to see ETFs and derivatives in ADX next year?

ETFs need regulations which are now ready in Abu Dhabi. We just need two more things – more awareness for investors and waiting for the issuer to come and list ETF. Awareness has been a bit late because of the crisis but will be coming definitely. Now, we are just waiting for the issuer.

As for derivatives, it is a serious and very heavy and advanced instrument. Some have said that plans for derivatives have been delayed by the global crisis. It is partially true, but the thing is that it is in our mind but not a priority because it needs special players, special environment and special rules and regulations. So the time to introduce derivatives to ADX is pushed back. We plan to have derivatives but it will take time. I believe we should first become mature about the equity market and the bond market before we can move on to derivatives.

I believe in 2010 we could see the introduction of the first ETF because if you look worldwide, growth of having ETFs is very high. So we are optimistic that we will see these instruments in our exchange next year.

What about foreign investors? Are they still in the market?

Foreign investors have always been a big player in the UAE market, specially in Abu Dhabi. Our figures show that they are buying more than selling in the first half. Net foreign trading stood at about Dh384 million. This level jumped to Dh820m in the second half, bringing the total foreign net dealing to Dh1.2 billion. This shows foreign investors are always finding opportunities in our markets.

Do you encourage listed companies to open up to foreign investors:

This depends on the company itself. But I think the wider the investor data base you have, the better you perform. This is a very positive thing because it will give companies a chance to have more investors, diversify their investments and get more institutional investors. I think widening the percentage of foreign ownership in listed companies is good because it will add benefits to the local economy. So I prefer this and encourage companies to do so.

There have been calls for the creation of a bond market in the UAE, what do you think?

I think a bond market is now needed in the UAE because the number of issued bonds is getting higher and higher, but most of them are listed abroad. So why don't they come and list them in our market… that will give investors access to our equity market and facilitate liquidity. A bond market is a value added to any exchange. We are ready in terms of creating a bond market and we are encouraging the establishment of this market. We aim to create a bond market at ADX… it needs more co-ordination and work but we are hopeful we could eventually see a bond market in the UAE.

What are your plans to develop ADX?

We have specific plans to develop and upgrade ADX on a yearly basis. We are very much committed to Abu Dhabi's Vision 2030. Based on that commitment, we are always into the development process with emphasis on better disclosure and performance, and stronger awareness for investors and brokers. It is an ongoing strategy and we will continue to develop our structure and always have contingency plans.


PROFILE: Rashed Al Baloushi Deputy Chief Executive and Director of Operations, ADX

Al Baloushi joined Abu Dhabi Securities Exchange (ADX) in April 2000 where he played an instrumental role in the establishment of the market in November 2000.

Al Baloushi started his career at ADX as Manager of the Clearing, Settlement, Depositary and Registry Department. Prior to joining ADX, he was head of Registrar and Depository at the Abu Dhabi Fee Zone Authority.

Al Baloushi has an MBA from the UAE University and a Bachelor of Science in Computer Information Systems from Benedict College, Columbia, South Carolina.

 

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