Download - FEAS xxx.fh9

FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT MAY 2005
ABU DHABI SECURITIES MARKET
Hamad Abdulla Al Shamsi
General Manager
The Abu Dhabi Securities Market (ADSM)
showed remarkable growth during 2004 as
compared to 2003, continuing the rapid
growth experienced since its inception in
2000.
The trading value increased to US$ 4.5
billion (AED 16.4 billion) in 2004, an increase
of 343% when compared to 2003’s trading
volume of US$ 1.0 billion (AED 3.7 billion).
The number of trades in 2004 increased by
996 and as a result gave a total of 83,300
trades. The turnover ratio was 20% of the
total subscribed shares with 60% of the total
shares available in the market. Moreover, the
daily average trading value in 2004 increased
to US$ 15.0 million (AED 55 million) from
US$ 3.8 million (AED 14 million) in 2003. The
daily average number of shares traded also
rose to approximately 3.3 million shares from
900 thousand shares in 2003.
HISTORY AND DEVELOPMENT
Securities trading in the United Arab
Emirates dates back to the early 1960s
when public shareholding companies began
to come into existence in the country. It was
generally a generic and haphazard era
where the securities market had been
created and operated by the mediation of
brokerage firms.
Moreover, securities trading in such an
ill-ordered environment had created flaws
and imbalances in the market, and
particularly in the absence of a proper
mechanism to conclusively determining the
value of securities, supervision and control
of brokerage firms as well as a lack of
transparency and disclosure by the
companies whose shares constitute a part
of the market trading business.
This tremulous situation has had an adverse
impact in establishing a biased and unfair
policy for evaluating securities fairly, and
subsequently resulted in severe fluctuations
in the market. In view of this chaos, the
shares value had been at times overstated
which led to heavy consequences and
losses on the part of investors.
Having taken the above facts into
consideration as the issue of regulating the
PAGE 32
The market capitalization of companies
listed at ADSM as at the end of 2004 was
US$ 48.1 billion (AED 176.6 billion), which
represented 55% of the United Arab
Emirates (UAE) GDP.
During 2004, the share prices of 32
companies rose (out of a total of 34
companies traded on ADSM); while share
prices of 2 companies fell. The market
capitalization of companies listed at ADSM
as at the end of 2004 was US$ 48.1 billion
(AED 176.6 billion), which represented 55%
of the United Arab Emirates (UAE) GDP.
The Market index rose by 1,314 points, an
increase of 74.8% and closed at 3070.9.
The 74.8% increase in the index represented
only the capital gain. By adding the
distributed dividends during 2004 the
increase was approximately 80%.
securities market is, undoubtedly, of
significant importance with view to its crucial
role in the domestic economy. Plans have
been set up for organizing this market to
ensure the integrity and smoothness of
trading in securities and establish investors’
protection. The aforementioned items must,
of course be subject to the power of supply
and demand in compliance with the
principle of information transparency and
disclosure with respect to the companies
engaged in the business of securities
trading. Within this framework, intensive
efforts exerted with the promulgation of Law
No. (4) of 2000 concerning the
establishment of the UAE Securities &
Commodities Authority and subsequently
the establishment of the Securities Market.
FUTURE OUTLOOK
In 2005, the ADSM plans to:
• increase activities to support growth in
listings, turnover and liquidity through:
• encouragement of listing for family
companies and foreign companies;
• increased system capacity to cope with
growing market volumes;
• enhanced IT processes and information
distribution;
• implementation of remote trading for
brokers.
• enhance market standards in:
• corporate governance;
• capital adequacy and surveillance of
brokers;
• broker education and qualification;
• automate market surveillance;
• enhance Registry and CSD services;
• further bond market initiatives;
• link trading with Muscat Securities Market;
• implement a new marketing and
communications program; and
• strengthened laws, regulations and rules
through:
• commercial and capital market law.
• securities regulation.
• ADSM rules for listing, brokers and
trading.