ADX’s market liquidity jumps five-fold in 2021 amid IPO boom

Abu Dhabi Securities Exchange (ADX)’s market liquidity jumped five-fold in 2021 amid an IPO boom. Traded values (buy + sell) on the exchange increased 407 per cent from Dhs145 billion in 2020 to Dhs739 billion in 2021, driven by higher levels of domestic and international investment. Local investors accounted for 70 per cent of the exchange’s traded value, while foreign institutional investors accounted for 30 per cent.

Meanwhile, net foreign investment on the exchange reached Dhs15 billion in 2021, the highest level recorded in the exchange’s history. The market value of shares owned by foreign investors in 2021 increased by 100 per cent from Dhs78 billion to Dhs156 billion, while those held by UAE nationals reached Dhs1.5 trillion compared to Dhs685 billion in 2021, an increase of 117 per cent.

At the same time, the number of new investors who registered on the exchange in 2021 increased by 701 per cent from 2,362 in 2020 to 18938 in 2021. The number of new institutional investors increased 77 per cent to 708 in 2021 versus 400 in 2020.

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 Dhs1.6 trillion.

Underpinning the exchange’s bumper year has been the roll out of the ‘ADX One’ strategy, announced at the beginning of 2021. The strategy comprises 22 initiatives to bolster 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, which paved the way for an agreement with FTSE Russell to develop co-branded indices, including a tradable FTSE ADX Blue Chip Index that will be launched in 2022. The exchange has also established a framework for listing Special Purpose Acquisition Company (SPAC) on ADX, which was approved by the Securities and Commodities Authority (SCA) in January.

Furthermore as part of the ‘ADX One’ strategy, the exchange forged several partnerships with global stock markets in 2021, sealing agreements with Bahrain Bourse, Bursa Istanbul, and Astana International Exchange to unlock direct market opportunities and enhance cooperation through information exchange. The exchange also moved to new premises in the Landmark building on Abu Dhabi’s Corniche, unveiled its new brand and introduced an investor relations and sustainability guide books.

The exchange’s historic performance in 2021 was supported by ADX’s efforts to attract issuers to the main and Second Market. In 2021, the ADX welcomed nine companies to the exchange, including Adnoc Drilling, the biggest IPO in the exchange’s history, Alpha Dhabi, the real estate and construction company owned by International Holding Company (IHC), and Yahsat, the satellite operator owned by Mubadala Investment Company, and Fertiglobe.

Six debt instruments and an Exchange Traded Fund (ETF) were also added on the exchange in 2021, bringing the number of publicly listed companies to 69, debt instruments to 27, private companies to 13 and ETFs to two.

ADX has recently signed an agreement with Borsa Istanbul wherein the latter will provide consultancy services and implementation support to Abu Dhabi Securities Exchange in Information Technologies.

The signing of the agreement came during the visit of the President Recep Tayyip Erdoğan of Turkey, to the UAE on 14th February. The CEO Korkmaz Ergun, signed it on behalf of Borsa İstanbul and the Managing Director and CEO, Saeed Al Dhaheri, on behalf of ADX.

Borsa Istanbul will provide consultancy service to ADX in the field of Information Technologies (IT) and the establishment of systems, integration, updating the platform, transferring data to the new platform, application and acceptance tests, experience transfer and training.

Hisham Khalid Malak, Chairman of ADX, said that broadening global partnerships is a core element of ADX’s strategy to increase liquidity, enhance market efficiency, and drive the sustainable growth of our market.

“We appreciate Borsa Istanbul’s role in further developing ADX’s technological capabilities. We also look forward to exploring further areas of cooperation for the mutual benefit of our exchanges,” he added. Ergun, in turn, stated that this agreement marks their first service export as Borsa Istanbul. As part of the agreement, Bursa Istanbul will support ADX in its technological transformation efforts.

“We are very keen on being able to transfer our knowledge and experience to other exchanges within the framework of these efforts. We will take this project as our own and work with ADX in system tests, system integration and data transfer processes in the most effective way, provide consultancy on various issues and make every effort to complete this project as a brand project of Borsa İstanbul in the best possible way,” he noted.

WAM