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Abu Dhabi Securities Exchange sees rapid acceleration in access for foreign investors

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Abu Dhabi Securities Exchange

Abu Dhabi Securities Exchange (ADX), on July 16, reports on its performance for the six months ending June 30, 2020. The report focuses on the exchange’s efforts in supporting Abu Dhabi’s economy through the development of its capital markets, building a strong platform for growth and foreign investment as the easing of COVID-19 restrictions continues.

Highlights

  • Three ADX-listed companies raised foreign ownership limits to 49 percent and one increased to 40 percent, adding AED6.3 billion of stock in these companies access to foreign investors.

  • 55 ADX-listed companies now accessible to foreign investors, representing 80 percent of the exchange.

  • Top 25 global asset managers are all registered investors on ADX.

  • 1,723 new investors: 226 institutional and 1,497 individual/retail, of whom more than half (53 percent) were non-UAE nationals.

  • The number of non-UAE nationals who acquired an investor number in ADX increased by 25 percent during H1 2020 compared to H1 2019.

  • Total market capitalization of almost AED500 billion as at June 30, 2020, which has since risen by more than 20 percent to AED607 billion following completion of TAQA’s transaction with AD Power on July 1, 2020.

  • Digital initiatives proceeded at pace, with a range of new tools now available to investors, which were of especial importance during the COVID-19 crisis.

  • Launch of Environmental, Social & Governance Report, the first comprehensive report of its kind to be issued by an exchange in the region.

Khaleefa Al Mansouri, ADX Chief Executive, said, “The whole of Abu Dhabi has collaborated to ensure that the emirate emerges from the COVID-19 crisis well placed to resume its long-term growth trajectory. ADX has coordinated closely with its listed companies and other stakeholders to build a robust, modern, and increasingly international capital market, an essential pillar of any economy. Especially given the obvious challenges, our performance demonstrates that ADX is delivering on its key strategic objective of becoming more liquid and more accessible to a broader mix of investors.”

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In the first half of 2020, ADX made significant progress in achieving its ambitions to become a leading international exchange and attract more foreign investors, as well as to develop a more varied domestic investor base. Four companies raised their limits on foreign ownership: Methaq Takaful Insurance Company (ADX: METHAQ) raised its limit from 25 percent to 40 percent; Wahat Al Zaweya Holding (ADX: WAZ) went from 0 to 49 percent; Agthia Group (ADX: AGTHIA) increased its limit from 0 to 49 percent; and Abu Dhabi Islamic Bank (ADX: ADIB) took its permitted level of foreign ownership from 25 percent to 40 percent. This means that since the end of 2019, an additional AED6.3 billion of stock in these companies is currently accessible to foreign investors, across three separate sectors. In total, 55 companies on ADX are currently accessible to foreign investors, representing 80 percent of the total exchange.

In addition, on July 1, 2020, Abu Dhabi National Energy Company (ADX: TAQA) completed the merger of its energy and water assets with certain of Abu Dhabi Power’s. The transaction added more than AED100 billion to ADX’s total market capitalization, increasing it by 20 percent to AED607 billion at time of writing. TAQA is now one of the largest companies on ADX.

ADX also saw increased levels of interest from the expatriate investment community, with a 25 percent increase in the number of non-UAE nationals registering to invest in ADX compared to H1 2019. This demonstrates the growing levels of awareness of the investment opportunities available on the exchange. The largest proportion of expatriate investors by country were from the UK, who traded AED5.2 billion of shares in the period, followed by those from the US (AED4.1 billion) and then Luxembourg (AED1.2 billion.)  During the period, 1,723 new investors traded on ADX for the first time, of which 1,497 (87 percent) came from the retail community, further evidence of increased interest from a broader range of investors and providing a further boost to liquidity.

Total trading value (buy + sell) for the period was AED40.7 billion (H1 2019 AED54.7 billion), 14.2 billion shares were traded (H1 2019: 14.6 billion) and total market capitalization at June 30, 2020, was AED494.6 billion (June 30, 2019: AED519.9 billion). The year-on-year decrease was inevitable in view of COVID-19 and was similar to the experience of other exchanges around the world. Moreover, ADX reacted swiftly and proactively to the pandemic, offering support to all its stakeholders by installing state-of-the-art business continuity systems to enable the proper functioning of the exchange.

One such example was the introduction of remote e-voting services for Annual General Meetings (AGMs) of companies, without charging any implementation fees. The measure addresses the need to provide value-added services to support the private sector, in light of the market turbulence caused by COVID-19. The approach is aligned with ADX’s business development strategy and commitment to comprehensively utilize digital services to achieve higher customer satisfaction, while actively enhancing the global business environment.

The SAHMI integrated digital platform, first unveiled in 2018, and continuously updated since then to meet the needs of new technology advancements, was of particular importance, as it provides an integrated system that enables investors to manage their everyday transactions via their mobile devices, thereby reducing human interaction. ADX continues to put digital transformation at the heart of its growth strategy and expects to announce further progress in this area during the second half of the year and beyond.

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At the end of May, ADX was declared the winner of the 2020 Best Trading Innovation Excellence – GCC Award at the Capital Finance International (CFI) annual event. This was a significant endorsement of the leading role the exchange has played in innovation, through the development of a range of digital products and initiatives. The CFI Awards seek out organizations that contribute significantly to the convergence of economies and truly add value for all stakeholders.

Finally, on June 21, 2020, ADX published its inaugural Environmental, Social & Governance (ESG) Report, the first exchange in the region to do so. The publication of the ESG report demonstrates ADX’s commitment to transparency, by encouraging its listed companies to follow its lead in adopting such policies. It also answers to the growing demand among investors for enhanced transparency on listed companies’ ESG practices, given growing concerns about sustainability.

Looking ahead, H.E. Khaleefa Al Mansouri concluded, “We can’t predict when the world will turn the corner, but there are significant grounds for optimism in Abu Dhabi and at ADX. Our performance so far this year shows that we are as well placed as any exchange in the world to enable investors to take advantage of improving market conditions, by increasing access, liquidity and the range of products available, an essential component of a healthy and growing economy. We expect these to include ETFs and REITs, as well as others, on a sophisticated and innovative digital platform, and with greater levels of transparency. We therefore remain confident of meeting our objective of being “Your Market of Choice”, one that shapes the 20s, and that supports the achievement of Abu Dhabi’s strategic plans for a diversified economy and a sustainable future.”

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