Abu Dhabi and Kuwait bourses sign agreement to improve liquidity

ADX is focusing on forging partnerships with global stock markets

Abu Dhabi Securities Exchange announced its ADX One strategy last year to “significantly" increase market capitalisation. Photo: ADX

Abu Dhabi Securities Exchange, the Arab world’s second-largest stock market, Boursa Kuwait and the Kuwait Clearing Company have signed an agreement to boost bilateral investment through cross-border trading and listings.

Under the co-operation agreement, the three entities will encourage and facilitate legislative, depository and trading collaboration.

They will also work to improve market literacy among investors, according to a statement on Wednesday.

“Underscoring the strong economic ties between the two countries, the agreement will facilitate inter-exchange trading and put in place procedures for dual listings and the cross-border distribution of dividends in the UAE and Kuwait," Matar Al Neyadi, UAE ambassador to Kuwait, said.

The move came as ADX continues its focus on alliances with markets around the world to improve its capitalisation.

It signed partnerships with Bahrain Bourse, Turkey's Borsa Istanbul and Kazakhstan's Astana International Exchange last year to explore direct market opportunities and improve co-operation through information exchange.

“The alliance between ADX, Boursa Kuwait and Kuwait Clearing Company highlights the unique investment opportunities that are available to investors in both markets,” Hisham Malak, chairman of ADX, said. “The agreement will also deepen market liquidity and contribute to the long-term sustainable economic growth of both our countries.”

ADX is part of ADQ, one of the region's largest holding companies with a broad portfolio of major enterprises spanning key sectors of Abu Dhabi's economy.

Last year, the exchange announced its ADX One strategy to “significantly" increase market capitalisation, strengthen corporate governance and "meet the evolving needs of global issuers and investors".

As part of the strategy, the ADX introduced a derivatives market in the fourth quarter and signed an agreement with FTSE Russell to develop co-branded indices, including a tradable FTSE ADX Blue Chip Index that will be launched this year.

The exchange also established the region's first special purpose acquisition company (Spac) framework, which was approved by the Securities and Commodities Authority in January.

Spacs, or blank-cheque companies, are entities with no commercial operations and are formed with the intention of raising funds through an IPO.

“Partnerships with international exchanges are central to our ADX One strategy,” Saeed Al Dhaheri, managing director and chief executive of ADX, said. “Not only will this collaboration increase our reach to global investors, but it will also help us to further improve market efficiency and bring about mutually beneficial results.”

Established in 2014, Boursa Kuwait is the operator of the Kuwait Stock Exchange, and is responsible for driving engagement and growth in its capital market.

Kuwait Clearing Company, also known as Maqasa, is the central clearing, settlement and depository entity for the Kuwaiti securities market.

"We look forward to strengthening our co-operation with the UAE and attracting more local, regional and international investors to the Kuwaiti and Emirati financial markets," said Hamad Al Humaidhi, chairman of Boursa Kuwait.