The United Arab Emirates’ rulers will soon achieve a distinction they’ve long coveted. Their once sleepy stock exchanges will be home to companies valued at $1 trillion. This outsize success—the markets already ranked No. 17 in the world at the end of March, ahead of Brazil and Spain—relies on the recent chart-topping performance of the Abu Dhabi Securities Exchange, run by the UAE’s biggest and wealthiest city-state.
But global investors tempted to pile in face the Abu Dhabi market’s defining feature. Royal family member Sheikh Tahnoon bin Zayed Al Nahyan—one of Abu Dhabi’s two deputy rulers, national security adviser of the UAE and brother to its president—dominates just about every part of its business. As of March 31, the sheikh’s companies or those he oversees had a weighting of at least 65% of the benchmark FTSE ADX General Index.
The biggest: his conglomerate International Holding Co., or IHC, which has investments in everything from Rihanna’s lingerie line to Elon Musk’s SpaceX. IHC is up more than 400-fold since 2019. The sprawling conglomerate, which traces its roots back to a fish farming firm, is now valued at almost $240 billion, more than Walt Disney Co. or McDonald’s Corp.
IHC also makes money from trading on the very exchange where it’s listed. It owns the Abu Dhabi stock exchange’s most active broker. Meanwhile, the emirate’s ADQ fund, which Sheikh Tahnoon chairs, oversees the exchange itself.
The sheikh’s influence runs even deeper. He’s the de facto business chief of Abu Dhabi’s ruling Al Nahyan family, the world’s wealthiest. And he steers about $1.5 trillion, mostly through the sovereign funds he heads. It’s as if one man directed the New York Stock Exchange as well as two-thirds of the companies in the S&P 500 stock index.
Many bankers, investors and economists say the Abu Dhabi market’s unusual structure poses challenges for global investment managers who want to profit as its main index has almost tripled since April 2020, making it the world’s best-performing major market over that period. Outsiders can struggle to get a piece of the action, because UAE nationals and companies own large stakes and hold on to them; those who manage to do so wonder if they’ll be treated as favorably as insiders.
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