Foreign investment on the Abu Dhabi Securities Market (ADSM) will increase in the coming period, according to its Deputy Director-General Rashed A Al Baloushi.
Currently, there is a 60-40 split in the market’s 860,000 participants between nationals and foreign investors, respectively. However, there has been a sea change in the nationalities represented on ADSM, Al Balousi told
Emirates Business on the sidelines of the third Middle East IPO Summit. In 2006 Saudis formed the biggest percentage of foreign investors with 36 per cent. Indians and Egyptians came a joint second with 14 per cent, then Jordanians (8.8 per cent) and Kuwaitis (6.2 per cent).
However, in 2007 British investors became the largest foreign group with 77.2 per cent. Germans came second with 16 per cent, followed by investors from Luxembourg with three per cent, Kuwaitis two per cent and Bahrainis 1.5 per cent.
Al Baloushi attributed the increase in the percentage of European investors to tours conducted in many European countries and Southeast Asia by ADSM executives. Officials, he said, have plans to organise trips to countries such as Japan soon.
The type of investors on the market also changed between 2006 and 2007. Earlier most foreign investors were individuals but by last year firms were buying in.
The increase in Saudi investors in ADSM in 2006 occurred when they heavily bought shares in Dana Gas.
The value of foreigners’ share purchases in 2007 was Dh40 billion, while they sold shares worth Dh30bn. So, net foreign investment was Dh10bn.
In 2006 the net foreign investment stood at $272.2 million (Dh999.7m). Therefore, there was a 10-fold increase in 2007.
Trading by foreigners rose from 15 per cent of the total trading in 2006 to 20.3 per cent in 2007. General trading in ADSM increased by 148 per cent in 2007 compared to 2006, with the number of shares increasing by 361 per cent.
In his speech at the IPO Summit, Al Baloushi said Gulf exchanges are still developing. Stock markets in GCC countries have 642 listed companies with a capital of $1.060bn, an increase of 50 per cent compared to last year. Investment revenues of those companies are 21 per cent, an increase of five per cent compared to the global rate, which is 16 per cent.
Gulf exchanges, he said, promise many investment opportunities as they have numerous positive points, such as a growing number of listed companies, increasing liquidity, growing sukuk market, falling interest rates, increasing ownership, foreign contribution and growing local loans.
He identified three main sectors that have seen dramatic growth: infrastructure, real estate and Islamic financial establishments.
Gulf exchanges, he added, will witness growth in the coming period due to their diverse economies and government support of privatisation programmes.
He pointed out studies conducted by international banks and establishments, including City Group in Tokyo, that have confirmed 70 per cent of world’s asset management establishments are heading for the Gulf, Middle East and North Africa.
Replying to questions about whether the number of foreigners on the exchange raised any concern, Al Balousi said there are no fears, as ADSM management has created a suitable environment for effective foreign contribution.
Foreign investment on ADSM to increase