Business | Markets
ADX seeks to lure listings from foreign companies
The Abu Dhabi Securities Exchange (ADX) is seeking to list international companies to enhance its profile, a top executive revealed on Friday.
- By Ahmed A. Elewa, Senior Reporter
- Published: 00:01 August 9, 2008
Abu Dhabi: The Abu Dhabi Securities Exchange (ADX) is seeking to list international companies to enhance its profile, a top executive revealed on Friday.
The move comes in response to the relatively limited options before investors in a market where the real estate and financial sectors hold sway.
"Other than real estate and finance, there are limited options for investors at ADX, where we cannot find an electronics sector for instance, and hence we are seeking to broaden these choices by attracting international players," ADX's chief executive officer Tom Healy told Gulf News.
The market plans to achieve its target through a gradual approach, starting with exchange traded funds (ETFs), which represents an excellent way to market ADX overseas, according to Healy.
"If we accommodate ETFs and they perform well, then this will attract other international players to our market," he explained.
Nevertheless, ADX is awaiting necessary regulations, currently being considered by the Emirates Securities and Commodities Authority (Esca), which announced that it will issue new regulations governing new instruments within 2008.
The authority is already working on re-drafting its own regulations, as well as introducing new regulations covering new investment instruments including exchange traded funds and options.
"ADX is about seven years old, while Esca is even younger, and it will take time to change including the streamlining between ADX and Dubai Financial Market (DFM)," Healy said.
"Regulating the markets is best left to the regulator alone, as self-regulation is a fading trend in international markets, and this can ensure more streamlining between us and DFM," he added.
Derivatives
Other instruments being considered include a derivatives market, though Healy agrees that this will require a more mature market given the higher risks involved and the better management required.
The ADX general index has reported more than 34 per cent of gains in 2007 compared to the sluggish performance reported by developed markets due to the negative impact of the US subprime mortgage meltdown and the credit crunch crisis.
"As a result, we are seeing a gradual increase in foreign investors who are attracted to Abu Dhabi and the UAE's strong economy," Healy said.
"If the law on foreign ownership is changed, or if companies who currently do not allow foreigners to invest change the articles of association, then we expect the number, especially of institutions, to increase considerably," he added.
With the introduction of the new federal law allowing for family businesses to list only 30 per cent rather than 55 per cent, ADX is poised for more growth in terms of market capitalisation. "We are also developing new products, including ETFs and derivatives; if successful we believe these will also encourage foreigners to invest more," the chief executive explained.
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