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The Exchange seeks to double market capitalization in three years
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The bourse plans to launch derivates market in Q4, 2021
The UAE’s booming economy and the gradual opening up of the world markets helped Abu Dhabi Securities Exchange’s (ADX) market capitalization to cross US$300 billion (AED1.1 trillion) on 12 July 2021.
By doing so, the Exchange, owned by the wealth fund ADQ, has created history. The development, however, was not totally unexpected.
The ADX has reportedly set a target of double the market capitalization in the next three years and is planning to launch derivates market in Q4 2021.
ADX Chairman Mohammed Ali Al Shorafa Al-Hammadi has said the Exchange may see at least 10 new listings this year, which would be the most on record, according to reports.
What has accelerated this development in the ADX was the listing of Alpha Dhabi Holding, a subsidiary of International Holding Company (IHC) on 27 June 2021, the second largest after Abu Dhabi National Oil Company.
With the inauguration of Expo 2020 (on 1 October 2021) approaching faster, the news was received well among the business circles in the UAE.
In fact, equity trading on ADX was taking pace in a brisk manner as the Exchange’s market capitalization increased by 25 percent to US$250 billion (AED936 billion) at the end of Q1 2021.
The ADX did not look back in 2021 compared with past year as 125 new companies and 567 individuals became its members during Q1 2021. The Exchange’s benchmark index rose by 16.4 percent between 3 January 2021 and 31 March 2021 indicating the investor confidence in the market.
The Exchange’s gains were largely attributed to the spurt in real estate activity, investment, energy, telecommunication and financial sectors.
Dubai Financial Market
Dubai market, considered as the epicentre of the region’s financial activity, too received a boost due to real estate and banking sectors.
The ADX received another shot in the arm when it listed US$1.3 billion of bonds issued in April 2021 by Emirates Telecommunications Group Company (Etisalat Group) in two equal tranches maturing in 2028 and 2033. The bonds were more than six times over-subscribed.
The listing of Etisalat Group’s bonds was a sequel to the Abu Dhabi Ports’ US$1 billion listing around same time. In August 2020, the ADX listed Mamoura Diversified Global Holding’s bonds valued at US$4 billion.
Minimum representation in global indices
Despite making rapid progress, the number of GCC stocks in the MSCI Emerging Markets Index, whose market capitalization is said to be US$8.3 trillion, is very less compared with China and India, the two heavy weights in the emerging markets.
While the UAE and Qatar bourses were included in the index in 2014, Saudi Arabia and Kuwait were included in 2019 and 2020 respectively.
Among them Saudi Arabia’s weightage is around 2.8 percent with 36 companies, followed by Qatar at 0.67 percent with 12 companies, the UAE at 0.59 percent with 9 companies and Kuwait at 0.52 percent with 6 companies respectively.
Qatar was included in Dow Jones index subsequently and these global indices help in getting foreign investments boosting the region’s bourses.