ADX announces Investment Literacy Index and Market Sentiment Index

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ADXADX seeks a sustainable solution to improving investment literacy and today announces the results of its survey as part of its ongoing stakeholder consultation process.
Abu Dhabi Securities ExchangeAbu Dhabi Securities Exchange (ADXADX) today announced the introduction of its Investment Literacy Index and Market Sentiment Index. In early December ADXADX issued an E-questionnaire to assess the investment knowledge and understanding of ADXADX active and early-stage investors and the results of the survey have been used to derive an ADXADX Investor Literacy Index and a Market Sentiment Index. The questionnaire contained 2 sections, one posing questions to assess investors' knowledge and openness to fraud and risk while the second aimed at analyzing demographics, investment patterns and market sentiment. The literacy survey is based on answering 17 questions and the respondents are not provided with the correct answers or their overall score since it is planned to repeat the survey in the future, and to assess any improvement or deterioration in the results. In the first phase of this innovative project, the survey ran from 8 December 2009 to 28 December 2009, a total of 20 days.

Nearly 1700 investors participated and a massive 94% completed the survey; a very good result. This is the first stage of a long term strategy to address investor literacy. ADXADX is very grateful for the support given by investors and has received responses from all Emirates, all GCC countries, as well as responses from the US, Canada, Europe, Asia and Australia.

The Abu Dhabi Economic Vision 2030 sets out concrete steps for economic and societal development. As a key part of its strategic plan, ADXADX has engaged with investors, as key stakeholders of the Exchange. The survey results which establish the Investment Literacy Index and Market Sentiment Index will form the basis for directing ADXADX's market awareness and education programs. Although the survey initiative has just been completed, ADXADX is already assessing is current market awareness approach and considering new plans of action.

Rashed Al Baloushi, ADXADX Deputy Chief Executive, said, "We are delighted to have completed the first phase of this innovative project in an ongoing campaign to improve investor literacy. This we believe will make a substantial, long-term contribution to the development of Abu Dhabi society; one of the main driving forces of the Abu Dhabi Economic Vision 2030. The use of indices form a solid benchmark on which we can plan as we strive to improve our relations with key stakeholders and support the Abu Dhabi Economic Vision 2030."

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Indeed the investor literacy survey and index are part of an overall marketing assessment program, which includes satisfaction surveys, spanning key stakeholders, for example, brokers, listed companies and investors.

ADXADX believes the literacy survey findings will be of major benefit to schools, colleges and universities, as well as accredited training bodies operating within the region, since it will guide them and allow them to contribute to societal development via a careful review of education and training curricula.

Investor Literacy Index: 52.92%

A more detailed analysis is set out in Addendum 1; this shows the percentages of respondents giving the correct answer as well as providing preliminary focus areas for market awareness and education; these are highlighted in red - percentages highlighted in green show answers that provide more comfort.

This is the first time that a benchmark has been set for this important subject; ADXADX is not aware of any emerging market which has combined the need for surveying demographics, market sentiment and literacy. ADXADX considers this index of 52.92 to be a very positive sign since as will be seen later the demographic profile of respondents is wide in terms of age, gender, geography and income level - see Addendum 2 below. The analysis provides clear pointers for improvement areas and ADXADX believes this is an excellent result on which improvement programs and targets can be established.

The second ADXADX index derived from the survey assesses market sentiment during the severe global financial crisis. ADXADX solicited investors views about the market, posing questions to understand how they viewed the market going forward. ADXADX calculated the 'market sentiment index' whereby an index of -100% would indicate that all respondents would view the market as decreasing, zero% would indicate they expected markets to stay the same and +100% would indicate that markets would increase.

The survey and calculation provide the following index:

Investors' Market Sentiment Index: + 46.13%

The market sentiment indicates that a large percentage expect market growth in the next 12 months.

The detailed analysis of the market sentiment index is shown in Table 1. ADXADX has evaluated this as a 'market sentiment index' where -100% would indicate that all respondents would view the market as decreasing, zero% would indicate they expected markets to stay the same and +100% would indicate that markets would increase.

ADXADX has moved quickly to publish the findings of its innovative survey to formalize its consultation process and allow as many constituencies as possible to benefit from the survey results. As part of its ongoing consultation process, ADXADX will cooperate with universities, colleges and accredited training bodies to help them align their education curricula and training programs to meet the demands arising from the Economic Vision 2030 which aims to make Abu Dhabi a regional financial centre.

-Ends-

Established in November 2000, ADXADX is the official stock exchange of Abu Dhabi, the Federal Capital of the United Arab Emirates (UAE). ADXADX serves the domestic cash equity market, has 67 listed companies and a market capitalisation of AED 294 billion (USD 80 billion) as at 31 December 2009.

In alignment with the Abu Dhabi Government's Economic Vision 2030, ADXADX aspires to become the leading stock exchange in the Gulf region by leading the development of the UAE capital market through a well-regulated marketplace in a lawful environment that ensures integrity, transparency and disclosure. Investors can trade securities listed on ADXADX through any of its registered brokers and ADXADX has custody agreements with HSBC, National Bank of Abu Dhabi, Standard Chartered Bank, Deutsche Bank and Citi.

Please visit www.adx.ae for more information.

© Press Release 2010