Regulations, reforms and the diversification of the economy in Abu Dhabi have laid the groundwork for a solid investment outlook in the UAE’s capital said Abu Dhabi Securities Market Acting Director General, Rashed Al Baloushi.
Mr Al Baloushi, who was addressing members of the Asian business community in Singapore, cited the UAE’s progressive economic agenda, an increase in foreign direct investment, the move away from an oil-dependent economy and the predicted increase in nominal GDP as reasons why institutional investors should view Abu Dhabi as a long-term investment opportunity.
“High oil earnings and sustained expansion in a non-oil economy are expected to drive nominal GDP up from US$105.3 billion in 2004 to US$201.4 billion in 2010”, said Mr Al Baloushi.
“Abu Dhabi’s oil revenue also ensures that our public finances are robust, creating economic stability in the UAE.
“Our economic diversification programme has enabled dramatic growth in the tourism, real estate, manufacturing and heavy industry sectors, ensuring this stability should remain in the long term.”
Mr Al Baloushi went on to explain that, unlike some other Middle Eastern countries, the UAE’s progressive economic agenda, liberalisation and the growing role of the private sector was encouraging huge amounts of foreign direct investment into the country, reaching US$19 billion in 2005.
In addition to the strong outlook for Abu Dhabi’s economy, Mr Al Baloushi also talked extensively about the growth the stock market has witnessed since it was established only six years ago and that, in spite of the recent market correction, there remained un-tapped opportunities in the market.
“In 2001, we had 15 companies and a market capitalisation of US$5.7 billion. By 2005 this had grown to 59 companies and a market capitalisation of US$132 billion. The market capitalisation has fallen this year to US$94 billion, but we now have 60 listed securities and the p/e (price to earnings) ratio is 11.4, making us one of the most attractively valued markets in the Middle East.”
Mr Al Baloushi explained that in addition to the growth ADSM has witnessed, the market is committed to an international best practices programme which makes sure all aspects of the market – listed companies, brokers and market operations – maintain high international standards of practice. Included in this programme are also measures to facilitate foreign investment in ADSM, an education programme for investors and brokers and a proposed code of Corporate Governance for listed companies.
“One of the most important fundamentals of any market is education. One of our highest priorities has been to improve standards of awareness among investors and professionalism for brokers. To achieve this we have set up and run training courses, introduced insurance policies for brokers, set licensing standards for the UAE and currently working on establishing the Investment Professionals Association to administer a comprehensive education program.
“We also recognised that if we are to attract foreign investors to Abu Dhabi, we need to make it easier for them to invest here. This is why we have signed a custody agreement with HSBC and have signed agreements to facilitate cross listings and established electronic links with foreign exchanges.
