Market liquidity rose fivefold while net foreign investment on the exchange reached a record $4bn last year

Abu Dhabi Securities Exchange, the Arab world’s second-largest stock market, recorded a surge in liquidity and foreign investment in 2021 on the back of new listings.

Trade volumes on the exchange increased fivefold to Dh739 billion ($201bn) in 2021, from Dh145bn in the previous year, a statement published by Abu Dhabi Media Office on Monday said.

The number of new investors who registered on the exchange in 2021 grew eightfold to 18,938, from 2,362 in 2020. New institutional investors increased an annual 77 per cent to 708.

Net foreign investment on the exchange reached Dh15bn in 2021, the highest level recorded by the ADX so far.

Last year will be “remembered as one of the exchange’s most successful years”, said ADX chairman Hisham Khalid Malak.

“Throughout 2021, the management of ADX energetically encouraged the listing pipeline and introduced new products and services, making the exchange and Abu Dhabi a magnet for international investment.”

Nine companies listed on the main exchange last year, including Adnoc Drilling, which raised $1.1bn in October, as well as Fertiglobe, the world’s largest seaborne exporter of urea and ammonia combined, which reaped about $795 million.

Alpha Dhabi, the property and construction company owned by International Holding Company and Yahsat, the satellite operator owned by Mubadala Investment Company, were some of the other major companies that went public on the ADX.

Six debt instruments and an exchange-traded fund were also added on the bourse in 2021, bringing the number of publicly listed companies to 69, debt instruments to 27, private companies to 13 and ETFs to two.

“The increased demand for Abu Dhabi stocks helped propel the exchange’s benchmark index 64 per cent higher, making the measure one of the world’s best-performing equity gauges in 2021. Meanwhile, the market capitalisation of stocks listed on the ADX more than doubled to a record Dh1.6 trillion,” the statement said.

The bourse’s market capitalisation was Dh1.74tn at 2pm UAE time on Monday. The exchange has continued to record listings in 2022, with Abu Dhabi Ports Group raising $1.1bn from its share sale in February to help expand operations globally and boost growth. More IPOs are expected later this year.

Last year, Abu Dhabi also announced a Dh5bn IPO fund to help encourage and support private companies to list on the local stock market.

The IPO fund will invest in between five and 10 private companies a year, with a special focus on small and medium enterprises, and will aim to have a ticket size of between 10 per cent and 40 per cent of the float, officials said.

The market value of shares owned by foreign investors in 2021 doubled to Dh156bn from the previous year, while those held by Emiratis also increased more than twice to Dh1.5tn from 2020.

Local investors accounted for 70 per cent of the ADX’s traded value, while foreign institutional investors accounted for 30 per cent.

“In 2022, we will continue to move forward with the ADX One strategy and encourage the listings pipeline, which remains buoyant and healthy amid the improving macroeconomic environment,” Saeed Al Dhaheri, managing director and chief executive of ADX, said.

Early last year, the exchange announced its ADX One strategy to “significantly” increase market capitalisation, strengthen corporate governance and “meet the evolving needs of global issuers and investors”.

As part of the strategy, the ADX introduced a derivatives market in the fourth quarter and signed an agreement with FTSE Russell to develop co-branded indices, including a tradable FTSE ADX Blue Chip Index that will be launched this year.

The exchange also established the region’s first special purpose acquisition company (Spac) framework, which was approved by the Securities and Commodities Authority in January. The move is expected to pave the way for the listing of the first Spac on the ADX this year.

Spacs, or blank-cheque companies, are entities with no commercial operations and are formed with the intention of raising funds through an IPO.

ADX also signed partnerships with global stock markets including the Bahrain Bourse, Turkey’s Borsa Istanbul and Kazakhstan’s Astana International Exchange last year to explore direct market opportunities and improve cooperation through information exchange.

Last week, the Abu Dhabi bourse and Borsa Istanbul announced that they will collaborate on technology infrastructure after the two-day visit by Turkish President Recep Tayyip Erdogan to the UAE.

Borsa Istanbul will provide IT consultancy services and technology support to ADX as part of the agreement, which was signed between the exchanges of the two countries on February 14.

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