FEAS Yearbook FEAS Yearbook 2006 | Page 32

FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2006 ABU DHABI SECURITIES MARKET Abu Dhabi Securities Market showed remarkable growth during the first half of 2005. Nizar Al Obaidly Acting Director General Abu Dhabi Securities Market (ADSM) showed remarkable growth during the first half of 2005. The number of listed companies during this period increased from 35 companies to 43. The trading value rose up to US$ 13.6 billion (AED 49.8 billion) compared to US$ 1.4 billion (AED 5.2 billion) in the previous year. The number of trades increased to 202 thousand compared to 209 thousand during the same period of the previous year. Likewise, the daily average trading rose to US$ 91 million (AED 334.4 million) from HISTORY AND DEVELOPMENT Trading securities in the United Arab Emirates dates back to the early 1960s when public shareholding companies started to exist. It was a generic and haphazard era with a securities market created and operated by the mediation of brokerage firms. Trading in such an unstructured environment had created flaws and imbalances in the market, especially with the absence of a proper mechanism to conclusively determine the value of securities, the absence of supervision and control of brokerage firms as well as the lack of transparency and disclosure by the traded companies. This tremulous situation had an adverse impact in establishing fair policy for evaluating securities, and resulted in severe fluctuations in the market. In view of this chaos values of most of the shares were overstated leading to consequences and heavy losses to the investors. PAGE 30 US$ 9.6 million (AED 35.5 million) in the second half of 2004. The market capitalization as of the 30th June 2005, reached US$ 112 billion (AED 411 billion) whereas the figure as at December 31, 2004 was US$ 55.5 billion (AED 204 billion). The market index on June 2005 closed at 5706.6 while in December 2004 the market index closed at 3070.When adding the distributed dividends during the first half of 2005, the increase of the market index was approximately 90%. Taking the above facts into consideration, the issue of regulating the securities market became significantly important with view to its crucial role in the domestic economy. Plans have been set up to organize the market in order to ensure integrity and smoothness of trading and the movements of prices based on the power of supply and demand and the information disclosed by the listed companies. Within this framework, intensive efforts resulted in the promulgation of Law No. (4) of 2000 concerning the establishment of the UAE Securities & Commodities Authority and the establishment of securities market. FUTURE OUTLOOK In 2006, ADSM plans to: • continue the activities that support growth in listing, turnover and liquidity. • encourage the listing of family owned companies and foreign companies • increase system capacity to cope with the growing market volume • enhance IT processes and information distribution • enhance market standards: • corporate governance • capital adequacy and surveillance of brokers • educate brokers to improve their knowledge • further enhance registry and CSD services • initiate bonds market • continue alliance plans and link trading with other stock exchanges • improve laws, regulations and rules: • commercial and capital market law • securities regulation • ADSM rules concerning listing, brokers and trading