International relations: The bourse is looking for partners abroad

According to the most recent ADX data, during the period between the inception of the exchange and the end of 2011, a total of 904,940 National Investor Numbers (NINs) were issued. NINs are necessary to interact with the exchange. Some 344,367 were granted to foreign investors, the majority of which (272,455) came from GCC nations, followed by investors from other Arab countries (44,660), and a smaller number (22,252) from beyond the Middle East and North Africa region. The ADX’s plans to diversify liquidity risks in the market by attracting foreign investors call for an increase in the latter category in particular. It is anticipated that inflows from pensions and investment funds based in advanced economies will increase when the ADX is upgraded from MSCI “frontier” to “emerging market” status, a goal towards which the exchange and the regulator are working.

AWARDING EXPERIENCE: The ADX has already made tangible progress in attracting external investment. Net foreign investment increased 125% to Dh60m ($16.33m) in 2011, after a decline the previous year, and it continues to build on its international links to promote itself as a location for investment. Part of the promotions process involves strengthening the bourse’s ties with exchanges around the world. In 2012 the ADX made significant advances in this regard. In October 2012 the ADX became a full member of the World Federation of Exchanges (WFE), after succeeding in a ballot held at the 52nd General Assembly of the global body in Taipei, Taiwan. In doing so, it became the youngest exchange in the WFE’s history to gain full membership. The accolade is more than a symbolic acceptance by the global community; October’s election was the culmination of many visits by WFE staff to Abu Dhabi to assess and measure the ADX’s progress against its membership criteria.

“Through our employees hard work, we have cultivated excellence and have earned recognition among the more ‘grown-up’ stock markets,” Rashed Al Baloushi, the CEO of the ADX, said in press release at the event.

MAIN EVENTS: The ADX’s elevation to full membership was one of the highlights of a year that saw it focus on its external relations. These included an ongoing programme of promotional exhibitions, forums and roadshows staged with a view to promoting investment in the ADX, such as the Abu Dhabi Investment Forum staged in China and Korea. Additionally, a number of technically focused industry events which, although not investment-orientated, played an important role in raising the ADX’s profile.

In March 2012 Abu Dhabi hosted the third Middle East Securities Forum, which began in Doha in 2010 before moving to Muscat the following year. The event brought representatives from exchanges, banks, regulators and investors to the UAE’s capital for two days to discuss a range of industry topics centred on the broad theme of financial infrastructure development.

In September 2012 the ADX sent a delegation to the 17th General Assembly of the Federation of Euro-Asian Stock Exchanges, held in Almaty, Kazakhstan. The gathering of chief executives of exchanges, depositories and brokerage-dealer associations from the emerging markets of Europe and Asia also provided an opportunity for the first meeting of the Eurasia Group on Corporate Governance for Capital Market Development, which was staged by the Organisation for Economic Cooperation and Development (OECD) in conjunction with the Kazakhstan Stock Exchange.

Other significant events that enabled the ADX to enhance its international profile included a seminar on allocating capital in challenging markets, organised by The Financial Times and Threadneedle Asset Management, and EuroFinance’s ninth conference on strategic cash and liquidity management for companies in Europe – both held in March 2012.

The exchange has been assiduous in its pursuit of opportunities for cooperation with other exchanges. This is important to its wider strategy of increasing awareness of Abu Dhabi as a target for global investment, and 2013 is expected to see this policy continue.

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The Report: Abu Dhabi 2013

Capital Markets chapter from The Report: Abu Dhabi 2013

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