The Abu Dhabi Securities Market index closed the week up 4.9 per cent on Thursday, taking its gains since the start of the year to 36.75 per cent. Over the past year, the bourse has soared 68 per cent.
ADX now has a market capitalisation of Dh1.18 trillion ($321.6bn), with the most recent impetus coming from the listing of Alpha Dhabi, a broad investment group with 40,000 employees and revenue of Dh3.8bn.
The company's shares listed on Sunday and have gained 16.4 per cent since, giving It a valuation of Dh174.6 billion. That makes it the fourth-biggest company on the exchange by market cap, behind International Holdings Company (which owns 44 per cent of Alpha Dhabi and is valued at Dh224bn), Etisalat (valued at Dh193.1bn) and First Abu Dhabi Bank (Dh183.2bn).
"It's been an excellent year for ADX," said Mohammed Ali Yasin, chief strategy officer at Al Dhabi Capital. "May was a strong month for many markets and June continued to be for ADX. It has continued to lead the MSCI Emerging Market Index," he added.
MSCI's emerging market index comprises the biggest and most liquid stocks listed on emerging market exchanges around the world.
The ADX's gains this year can be attributed to a number of factors, starting from the appointment of a market maker in the last quarter of 2019, which "introduced stability [and] lowered volatility" in trading, Mr Yasin said.
The increase in the free float – the amount of shares available for investors to buy – of companies like Etisalat, FAB and Adnoc Distribution also increased their weighting in emerging market indexes, leading to inflows into these shares from institutional investors that passively track the benchmarks, he added.
"The third main factor is ... the unbelievable returns that IHC's share price has made. A year ago, IHC's share price was below Dh29 per share. Today, its Dh123 per share. It's not the same company – during the year there was a lot of spinning off of its private joint stock companies, and we saw of course the introduction of Alpha Dhabi," Mr Yasin said.
The gains made by ADX are in some ways a reversion to the mean, according to Junaid Ansari, head of investment strategy and research at Kamco Invest.
"Even with the gains this year, the performance of ADX is broadly in line with gains in the broader GCC index since 2014," Mr Ansari said. "ADX has gained 60.1 per cent since 2014, versus the GCC index gain of 58.7 per cent."
Government-related entities are also playing a role, with a widening of ownership expected in Taqa's shares following its merger with Abu Dhabi Power Corporation last year, leaving the latter with a 98.6 per cent stake. Adnoc Distribution's broadening of its investor base has also attracted investor interest, he added.
There is "minimal pressure" on the gains made so far this year being reversed, Mr Ansari said.
"Investors would take cues from [second quarter] earnings and the oil market. And both these factors are not expected to see significant decline based on consensus expectations," he said.
The potential for more IPOs on the back of Yahsat's listing later this month and continued high oil prices "gives us indication that ADX could consolidate its position and maybe continue making these gains", Mr Yasin said.
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Six pitfalls to avoid when trading company stocks
Following fashion
Investing is cyclical, buying last year's winners often means holding this year's losers.
Losing your balance
You end up with too much exposure to an individual company or sector that has taken your fancy.
Being over active
If you chop and change your portfolio too often, dealing charges will eat up your gains.
Running your losers
Investors hate admitting mistakes and hold onto bad stocks hoping they will come good.
Selling in a panic
If you sell up when the market drops, you have locked yourself out of the recovery.
Timing the market
Even the best investor in the world cannot consistently call market movements.
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
Profile box
Company name: baraka
Started: July 2020
Founders: Feras Jalbout and Kunal Taneja
Based: Dubai and Bahrain
Sector: FinTech
Initial investment: $150,000
Current staff: 12
Stage: Pre-seed capital raising of $1 million
Investors: Class 5 Global, FJ Labs, IMO Ventures, The Community Fund, VentureSouq, Fox Ventures, Dr Abdulla Elyas (private investment)
The biog
Born: near Sialkot, Pakistan, 1981
Profession: Driver
Family: wife, son (11), daughter (8)
Favourite drink: chai karak
Favourite place in Dubai: The neighbourhood of Khawaneej. “When I see the old houses over there, near the date palms, I can be reminded of my old times. If I don’t go down I cannot recall my old times.”
The biog
Name: Timothy Husband
Nationality: New Zealand
Education: Degree in zoology at The University of Sydney
Favourite book: Lemurs of Madagascar by Russell A Mittermeier
Favourite music: Billy Joel
Weekends and holidays: Talking about animals or visiting his farm in Australia
THE DETAILS
Director: Milan Jhaveri
Producer: Emmay Entertainment and T-Series
Cast: John Abraham, Manoj Bajpayee
Rating: 2/5
A little about CVRL
Founded in 1985 by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, the Central Veterinary Research Laboratory (CVRL) is a government diagnostic centre that provides testing and research facilities to the UAE and neighbouring countries.
One of its main goals is to provide permanent treatment solutions for veterinary related diseases.
The taxidermy centre was established 12 years ago and is headed by Dr Ulrich Wernery.
Our legal consultants
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Top investing tips for UAE residents in 2021
Build an emergency fund: Make sure you have enough cash to cover six months of expenses as a buffer against unexpected problems before you begin investing, advises Steve Cronin, the founder of DeadSimpleSaving.com.
Think long-term: When you invest, you need to have a long-term mindset, so don’t worry about momentary ups and downs in the stock market.
Invest worldwide: Diversify your investments globally, ideally by way of a global stock index fund.
Is your money tied up: Avoid anything where you cannot get your money back in full within a month at any time without any penalty.
Skip past the promises: “If an investment product is offering more than 10 per cent return per year, it is either extremely risky or a scam,” Mr Cronin says.
Choose plans with low fees: Make sure that any funds you buy do not charge more than 1 per cent in fees, Mr Cronin says. “If you invest by yourself, you can easily stay below this figure.” Managed funds and commissionable investments often come with higher fees.
Be sceptical about recommendations: If someone suggests an investment to you, ask if they stand to gain, advises Mr Cronin. “If they are receiving commission, they are unlikely to recommend an investment that’s best for you.”
Get financially independent: Mr Cronin advises UAE residents to pursue financial independence. Start with a Google search and improve your knowledge via expat investing websites or Facebook groups such as SimplyFI.
UAE currency: the story behind the money in your pockets
