Institutions account for a rising proportion of investor registrations on Abu Dhabi's stock exchange, hinting at a maturing of the Gulf stock market that could help to stabilise prices in the long term.
Institutions accounted for 9% of investor registrations in the first nine months of this year, according to data shared by the Abu Dhabi Securities Exchange (ADX) with Funds Global MENA. In 2013, institutions accounted for just 3% of overall registrations in the year and in 2014 they accounted for 7%.
Institutional investors, such as pension funds, insurance firms and asset managers, are said to have a beneficial effect on stock markets because they tend to be long-term investors that make decisions based on fundamental analysis. Individual investors, who still account for majority of equity trading in the Gulf countries, are said to be prone to panic buying and selling, which can exaggerate stock price volatility.
Volatility has been a feature of the Gulf stock markets this year, with the index of ADX currently 7% below its position at the start of the year having fallen sharply in August.
Although institutional registrations have risen in proportional terms, the overall number of investor registrations on ADX so far this year is lower than in 2014, which may be the result of recent volatility.
There were 19,251 investor registrations on ADX in 2014, of which 1,309 were institutions. In the first nine months of this year, there have been 7,360 registrations, of which 617 were institutions.
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