Abu Dhabi Securities Exchange (ADX) on Wednesday announced its plan to double market capitalisation over the next three years, with at least 10 companies planning to list this year.
Its ADX One strategy aims to increase market liquidity and further improve market efficiency and comes as the market capitalisation of companies listed on the ADX increased 39.7 percent in 2020 to a record AED750 billion ($204 billion).
The new strategy also aims to increase the exchange’s governance through further alignment with best international practices and by making ADX a more attractive destination for foreign investors.
The market value of foreign-owned shares in ADX-listed companies surpassed AED60 billion at the end of December last year.
The increased participation of international investors has come amid an increase in foreign ownership limits among the largest publicly traded companies in Abu Dhabi. Abu Dhabi National Insurance Company, Wahat Al Zaweya, Abu Dhabi National Energy Co, Emirates Driving Company and Abu Dhabi Aviation allowed foreign investors to own up to 49 percent.
Meanwhile, Abu Dhabi Islamic Bank, Methaq Takaful Insurance Co, and Agthia Group raised the foreign ownership limit to 40 percent, 49 percent and 49 percent respectively.
The strategy, which includes a range of innovative products and services such as new listings and the launch of derivatives trading, was devised after ADX became a public joint-stock company and joined ADQ, one of the region’s largest holding companies, in 2020.
Mohamed Ali Al Shorafa Al Hammadi (pictured above), chairman of ADX, said: “Our strategy will deepen our market strength and draw in new sources of liquidity while ensuring Abu Dhabi’s diversified, competitive, and transparent economic system that is attractive for local, regional and international investors. Over the coming years, ADX will continue to leverage Abu Dhabi’s unique regulatory environment, infrastructure and stability to stimulate long-term growth across the Emirate and more than double the market capitalization over the next three years.”
Throughout 2021, he said ADX is also expecting at least 10 new listings, including three exchange-traded funds (ETFs), adding that new listings will also be made on the fast-growing Second Market.
He also said the introduction of derivatives by the fourth quarter will allow institutional investors to hedge their investments, providing them with new opportunities to execute complex trading strategies.
Saeed Hamad Al Dhaheri, chief executive of ADX, said: “Our strategy is focused on delivering new products and services that will make ADX a conduit for investors seeking to tap high growth opportunities and for companies seeking to fund expansion plans.
“We are focused on growing the number of listings on the exchange and attracting new investors to boost market liquidity. The measures we have taken to enhance liquidity, through the introduction of market makers and increasing foreign ownership, have served to attract more than 400 institutional investors to the exchange in 2020 as well as lessen market volatility.
“We already have received interest from many companies seeking to list on ADX in 2021, especially in light of the tremendous success of the companies that listed on the Second Market in 2020.”
ADX, the second-largest stock market in the MENA region, advanced 48 percent from a March 2020 low following the global stock market drop and ended the year 0.6 percent lower at 5,045.332.
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