Trading volumes on DFM and ADX expected to jump with new working week

Monday-to-Friday trading week will boost liquidity in local stock markets, analysts say

Abu Dhabi Securities Exchange. The UAE bourses are likely to see more trading activity as they switch to a Monday-to-Friday trading week. Reuters

Trading volumes on both the Dubai Financial Market and Abu Dhabi Securities Exchanges are expected to surge in the coming days as both bourses switch to a Monday-to-Friday trading week in line with most global markets.

Both the DFM and ADX said they would operate from 10am to 3pm from Monday to Friday, following the UAE government's move last month to change the weekend from Friday and Saturday to Saturday and Sunday.

Today is the first Friday of trading on both stock markets since this change.

“As we go into 2022, this will have a substantial impact on the turnover and appetite of foreign investments into the UAE markets,” Marwan Shurrab, head of high-net-worth clients and retail equities at Al Ramz Capital, said.

“Our expectations are a healthy growth in turnover versus 2021 and that’s supported by not only the change in the working days but also in the strategy highlighted by Dubai in terms of supporting and pushing for a healthy pipeline of IPO’s [initial public offerings] within the DFM.”

Last year, Dubai announced plans to list 10 government and state-owned companies on the DFM as part of a broader strategy to double the financial market's size to Dh3 trillion ($816.8 billion). Emirates Central Cooling Systems Corporation – better known as Empower as well as government-owned utility company, Dubai Water and Electricity Authority and Dubai road toll system Salik are to be listed on DFM in the coming months. Tecom, the owner and operator of investment free zones in the emirate, will also be listed as part of the plans revealed by officials last year.

The emirate's authorities also launched a market maker fund worth Dh2bn as it seeks to encourage listings from sectors such as energy, logistics and retail.

Abu Dhabi is also launching a Dh5bn IPO fund to help encourage and support private companies to list on the local stock market.

The IPO fund will invest in five to 10 private companies a year, with a special focus on small and medium enterprises, and will aim to have a ticket size of between 10 per cent and 40 per cent of the float, according to officials.

“Aligning the work week with the West means that the UAE bourses would be open when the global capital markets are functioning, likely to induce increased trading activity,” Vijay Valecha, chief investment officer at Century Financial, said.

However, this is the first day both markets are trading on Friday and would not witness increased trading volume since investors are just getting used to the new schedule, he pointed out.

As investors become accustomed to the new arrangement and UAE bourses launch more IPOs in 2022, “that would potentially draw more foreign investments into the region and is likely going to boost liquidity and depth in the local markets going forward”, Mr Valecha said.

With oil prices likely to remain strong, both the DFM and ADX are expected to perform well in 2022, he added.

The DFM exchange has rallied more than 22 per cent in the last twelve months and is dominated by financial services and property companies including Emirates NBD, Dubai's biggest lender by assets and Emaar Properties, among others.

ADX, which is part of Abu Dhabi's holding company ADQ, is the second-biggest bourse in the Arab world after Saudi Arabia’s Tadawul Stock Exchange with a total market capitalisation of $1.48 trillion.

Aldar Properties, First Abu Dhabi Bank, the country's biggest lender by assets, Dana Gas and Adnoc Distribution, among others, trade on ADX, which has rallied more than 62 per cent in the last year.