ADX reduces daily maximum decline of shares to 5%

ABU DHABI, The Abu Dhabi Securities Exchange, ADX, announced the reduction of the maximum daily decline percentage for the shares of companies listed on ADX from 10 percent to five percent, from the previous closing price per session.

According to a statement released by the exchange, the decision is effective as of Wednesday, 18th March 2020, or until further notice from Securities and Commodities Authority, SCA.

The move is in response to a decision previously issued by Sultan bin Saeed Al Mansouri, Minister of Economy and Chairman of the SCA Board, regarding the reduction of the shares of the companies in the listed market; and under the decision taken by SCA which states that the local market in the country may raise the percentage to seven percent for a limited number of shares for some chosen companies. These select companies depend on a criteria determined by ADX and is approved by SCA.

ADX decided to keep the maximum daily rise limit at 15 percent, “as this decision is one of the measures and procedures ADX is taking which aims to protect savings of small investors, shareholders and institutional investors at this current time.”

Commenting on the announcement, Khalifa Salem Al Mansouri, ADX Chief Executive, said that this decision comes in light of the global turbulences that have recently affected many financial markets.

“The Exchange is proactively anticipating events and working to secure the savings of investors and shareholders and preserve their wealth and investments,” he continued, adding that the decision to reduce the maximum decline and maintain the maximum rise rates will continue “until stability returns to the financial markets”.

Al Mansouri went on to say, “The decision to reduce the maximum daily decline in the shares of companies listed in the market from 10 percent to five percent comes in line with solid principles of rebalancing trade so that trading activities are less impacted by the current global viral outbreak. This will support a stable investment climate underpinned by robust and stable foundations for all companies listed on ADX.”

He said that the decision will come into effect with the start of Wednesday’s trading, as the decision will reduce investors’ sharp reaction during trading hours.

The decision will also be in the interest of protecting the savings of individual investors, the wealth of shareholders and in preserving institutional investment funds, Al Mansouri continued. “It will also reduce significant downward stock movements for investors in the local market and will prevent against drifting behind sharp declines, such as those that affected stock exchange indicators of global and regional financial markets early last week,” he said.

The market value of ADX listed companies increased by the end of 2019 to about AED531 billion, which is 5.1 percent compared to AED505 billion for the year 2018.

Source: Emirates News Agency