Abu Dhabi Securities Exchange (ADX) has ruled out moves to become a joint-stock company or purchase joint-stock companies, CEO Tom Healy has revealed.
"The conversion of the ADX into a joint-stock company would be a decision for the government," he said at the launch of the market's 2008-2012 strategic plan. "We don't know the government's plans regarding such a transformation.
"But, definitely, such a move is not part of the ADX's current development plans or the five-year plan. We are doing our best to develop the ADX and make it the most popular exchange in the Gulf. "We will involve the government and society in the implementation of the strategic plan. We will review the plan each year and we work in an environment of transparency and disclosure."
Healy, when asked about the changing patterns of foreign investment in the
exchange, said: "The percentage of European investors, especially the British and Germans, rose noticeably last year. However, there was no decline in the number of GCC investors.
"This is the case with exchanges around the world – the percentages of nationalities investing change continually. Undoubtedly we have succeeded in attracting US and European investments.
"The increase in the percentage of European investors is attributed to the strength of Abu Dhabi's economy and the government's encouragement of foreign investment."
Deputy Director-General Rashed Abdul Kareem Al Baloushi said the percentage of foreign investors in the ADX had risen from 14.9 per cent of the total in 2006 to 26 per cent during the first quarter of 2008. Trading increased from Dh250 million in 2006 to Dh1.1 billion in the first quarter this year.
"These figures demonstrate the ADX's maturity and stability," he added.
Al Baloushi said priorities for the exchange included providing new mechanisms to finance projects by public joint-stock companies. The market was holding meetings with the Finance Department with a view to issuing reference bonds.
Al Baloushi said a bond market would facilitate the financing process, increase liquidity and enable the use of new investment tools. And he revealed that ADX was working to set up a derivatives market. He said the exchange would work hard to boost the efficiency of financial brokerage services.
"The publication of the names of violating brokerage companies on the market's website is not intended to blackmail them but to correct the situation."
He said speculation was not harmful but was rather an important element for the markets – but it must be kept under control. "We have a new system to check investors and speculators and are working to expand corporate rather than individual investments since individual investor decisions are quick and based on profits."
Al Baloushi said new laws were needed that were in line with developments in international financial markets. "Abu Dhabi officials understand market demands in this respect.They are not slow in making changes and modifications but all proposals are carefully studied and what is important is to make Abu Dhabi an investment attractive environment.
"We have to protect our investors and we need to attract and protect foreign investments as well as national ones. We have to help people make sound investment decisions. And the private sector has to be encouraged to achieve market stability and growth."
Meanwhile, Ziyad Al Dabbas, a financial adviser to the National Bank of Abu Dhabi, said the ADX's liquidity was still weak despite the vast projects launched by the government in a number of fields. Only a small percentage of the companies listed were actively traded.
"The market has to set clear mechanisms to boost the liquidity of companies, specifically leading ones," he added. "At least 20 companies are listed each year and this will create opportunities for investors.
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