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Rashed Abdul Karim Al Balooshi, CEO of the Abu Dhabi Securities Exchange (ADX)
Diversifying and modernising capital markets in the region
Global Platform
In an interview with Global Platform, Rashed Abdul Karim Al Balooshi, CEO of the Abu Dhabi Securities Exchange (ADX), speaks on how concrete strategies and new standards have helped the ADX diversity its offerings. The exchange is poised to become a regional leader following its inclusion on the MSCI’s emerging markets index and the release a new IPO legal framework, among other things. In addition, the bourse’s new trading platform offers seamless solutions that will put the market at investors’ fingertips.
Globally, the financial markets, as we are aware of, are going through a lot of challenges, but I think these challenges will be overcome very soon. What we do here is try to show the opportunities which are available in the ADX and to promote them internationally. And thank God we always receive positive feedback. Every time we do such a promotion, we meet with asset management funds and we meet with pension funds globally, and we show them the investment opportunities which are available in our region, and in Abu Dhabi specifically. We come back with their investment and their interest, and not to forget the experience and knowledge that we bring back with us when we come to Abu Dhabi.
Streamlining for efficiency
The IPO pipeline nowadays is slowing down because of uncertainty in the market. ESCA recently introduced new rules and regulation related to managing the IPO process. They talk about the book-building process, the underwriting process and the right issues, so it is regulated. This is the legal framework for the IPO. We have developed a very strong platform that will make the IPO process very fast, very efficient and electronic. In other words, investors today can buy the shares of a company and access the IPO process itself through an ATM machine. And in the second phase of that we will allow the brokers to be part of it. Why do we do that? Because we want to make the cycle of the IPO itself very efficient and easily accessible for investors, both locally and internationally. Once we see the confidence return to the market, IPO activities will be re-established again. Since March [2016] more IPOs are getting back into the European continent. And there was a study done by McKinsey that leads us to believe the IPO business in the UAE will reach $1.5bn in 2018.
Upgrading for the future
Being part of the MSCI will develop the infrastructure, as well as develop the rules, regulations and procedures of the market, and not only the MSCI, but FTSE and Dow Jones. For us what does it mean? First, being part of those indices actually means that there are criteria you have to fulfil, and to be part of the MSCI’s emerging market index the criteria that we had to fulfil by default will develop the infrastructure of the market, the procedures and rules. Second, the process of being in the MSCI promotes the market itself. You cannot imagine how much feedback and access we got internationally in our market. So it is a marketing and a promotion of the stock market. The third element is investment opportunities. The amount of dollars that was injected was good enough to stabilise and increase liquidity in the stock market; 1000 institutional investors came into the ADX right after the MSCI announcement of the UAE being included in the emerging market index.
Defining diversification
The other issue that we have worked on is the diversification of investments. It is not only about equity. We have reduced rights issues, and that is part of our strategy to have more than one financial instrument for the local and international investors to deal with. Bond and sukuk are other instruments that we are trying to make available for investors. The milestones that we have set in our strategy are very clear. First, they are developing and continuously strengthening the base of the stock market internally. Once we do that we are going to move onto the more developed and more advanced financial instruments. For us to keep developing this we need to move in alignment with the government’s strategy. Once we reach this goal, based on the objectives and the mission that we have, we will be the market of choice in the region.
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