Abu Dhabi: The Abu Dhabi Securities Exchange (ADX) is confident of the return of foreign investors on the emirate's potential for economic growth despite seeing their positions decline almost 90 per cent as a result of the global recession, a senior exchange official said on Tuesday.
Net foreign investment reached Dh1.2 billion at the end of 2009 compared to Dh5.8 billion in 2008 and Dh9.9 billion at the end of 2007, ADX Deputy CEO Rashed Al-Baloushi told Gulf News in an interview.
"If it's something that is only happening in UAE, I'll put a big question mark on it," said Al Baloushi.
"But this [happened] worldwide…Even in Europe, their net positions dropped down heavily. This is because fund managers have their obligations and duties in their home countries [during times of crisis]. So it's very realistic for people to [withdraw their money]."
As of Monday, the net position of foreigners for the year amounted to Dh105 million, according to ADX data.
Still the decline in foreign investment came in proportion to the decline in all investment in ADX as a result of the crisis, said Al Baloushi. Foreign participation has remained at around 35 per cent, he added.
Recent positive movement in Abu Dhabi has come on the Dubai World debt restructuring announcement, an event some analysts say could prove as a turning point in changing negative investor perception.
"International investors that have or had exposure to the local markets probably have global or emerging market mandates so the attractiveness of the UAE as an investment destination becomes relative," said Sameh Hassan, director of research at Rasmala Investments.
"Both local and international investors suffered significant losses during the downdraft and those mental wounds take some time to heal before they are forgotten," Hassan added.
Al Baloushi declined to comment on recent media reports of a possible merger of Abu Dhabi and Dubai capital markets citing the lack of an official announcement by their owners.
