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Have your say: UAE stock slide
GCC stock markets have been falling steadily wiping billions of dollars off markets. Was the slide inevitable? What caused the crash? Are you struggling to stay afloat?
- Gulf News Web Report
- Published: 00:00 May 7, 2006
Stock markets across the UAE, and GCC, have been falling steadily over the past few months.
Billions of dollars have been wiped off the value of markets across the region - with small investors being hit particularly hard in recent times.
Experts and analysts predict no respite in the near future, and have suggested a number of measures - including asking for a freeze on all new IPOs - to help the market regain some confidence.
Was the slide inevitable? What caused the crash? Are you a small investor struggling to stay afloat? Will the market bounce back? Should the government intervene?
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Banks are chasing
In view to what is happening with the stock recently is very sad. I am a small investor, have taken loans from the banks and this crash is affecting our lives very badly. The banks are after us for the instalments, and we have no cash coming from the stock market. My money is stuck with the stock market since 11th of January. I have been selling parts shares to make up for the loan instalments. I am in real trouble. If the government intervene's it could be of great help and we cud make up for our losses.
Vera
Dubai
Illogical falls
I am one of the oldest expatriate investors in the UAE stock markets. I feel very sad about what is happening in our markets recent months. The economy is doing well, oil prices are at record highs, there are no political problems, relations with neighbours and other countries are very very good, companies are posting impressive results. Despite all these factors the market is going down daily. I had some suggestions, which I already sent to DFM and ADSM. Speculation should not be allowed, All transactions should be delivery based, ie - can't buy and sell same day. Foreign Institutuional Investors should be allowed to buy like many of the other world markets. Allow companies to buy back their shares.
Salim
by Email
Hold on
Only 18 months ago the investors whom I routinely met were so enthusiastic and upbeat that when I asked them about what made them pay Dh20 to 40 for a share of nominal value of dirham one they would look me down and walked away. Every one had assumed the role of an investment expert and tipping others for the good. New investors were increasing day by day. Nobody was paying any attention to company performances and projected returns on their investment. The sentiments were driven by expectations and greed. Everybody invested while the prices were too illogical, now that prices are lower than the fair valuations, evrybody is pulling out swearing never to return to the bourse. It was a rat race with a sheep mentality. What caused the collapse of the markets? Well it is experiencing a domino effect, with bad news eminating from Saudi stock markets, the Saudi's started to pull out of UAE markets and along went the big timers and fund managers to meet redemption demands and thus set in a motion of panic selling. Long awaited foreign funds investments didn't materialise, the introduction of new IPOs, limitations on expatriate stock holdings. Now that speculaters and jobbers disappearing fast from the scene,it is hoped that gradually the new breed will find the market attractive when the dust is settled. My selction of stocks were based on the projected return and annualised income. I appear to have lost about Dh350,000 based on present day valuation, but am looking forward to receive a 6 to 8% annualised return on the stocks that I am clinging to.
Muhammad
UAE
Pulling out
I think the government must intervene in the Stock market and take the necessary measures to control it. A developed country is judge by their stock market. The government should keep in this mind and try to take necessary action against the big investors who are controlling the market. I am a small investor and am very much depressed by the market behaviour. I plan to take out the money from the market with huge losses and plan to stop investing in it. I have totally lost my faith in it.
Nazia
by Email
Be positive
The market has taught me one lesson ? don't panic, long term investment pays off. However, the government has to intervene to save the small investors especially for the small investor, and stricter controls should be applied. I wish the analysts and the newspapers would propagate a more positive thought to the investors rather than talk only about failures. The UAE has one of the strongest and most stable economies in the whole region.
J
Abu Dhabi
Markets will rise
There is no reason to panic. I have been an analyst in these markets for the last two years and I am very confident that the UAE markets will rise from dust. There are at least ten stocks that can provide a 40 per cent upside for 2006. So, dear investors, just be patient, have a macro picture of the economy (oil prices, budget surplus, government investments, consumer spending etc) and be a long term investor. Believe in your investments, and let the panic settle down.
A Reader
By email
What goes down...
It's quite an irony that the stock markets in the Gulf region are sliding ? with some of the fastest growing economies in the world and oil prices at an all time highs. In my opinion the investor attitudes and mind psyches need to change from the day or short term prospective to that of a longer term of a year or more. The big investors are the market makers and make the markets play to their tune. The markets thrive on baseless rumours rather than on fundamental and technical analysis. It's surprising to note that some of the blue chip stocks like Emaar in Dubai and the likes are quoting at discounts. The investors are more concerned as to what they can make today rather than profit from the strong performance of the companies in the longer term. It's the responsibility of independent monitoring authorities as well as the government to step in and take action to create an environment of investment rather than be a deterrent to the investment community. The world is watching the strange and ironic phenomenon of Gulf markets sliding when the economies are growing at a robust pace. The two of them just do not add up. Wrong signals are being sent to the potential international investors as well as investors within the Middle East. Remember what goes up, comes down BUT what comes down also goes up. It's all about economics and economic cycles. In the Gulf it's a lack of understanding and ignorance on part of the investor.
Mohammed
Dubai
Reasons for the crash
I think the current crash has been caused by a number of reasons: Firstly, I don?t think that traders are mature enough. Secondly, most equities are related to property and an excess of construction. Thirdly, traders depend on rumours and not on reality. There is not enough data about companies. Many people are trading on a daily basis. Finally the situation in neighbouring countries is having a bad effect on the market.
Umar
By email
No real reason
The UAE economy remains fundamentally strong and is expected to continue to grow at a fast pace for at least the next 15 to 20 years. Hugh infrastructure projects and the inflow of tourists and residents prove that the UAE has a lot of amenities to offer such as security, tax free pay, good weather and much more. There is no obvious reason for the current downfall of UAE Stock Markets. The downfall shows that majority of traders are high value speculators who tend to trade on a daily basis. Long term investors then get nervous and decide to leave the market. There is every reason for ADSM and DFM to start delivering excellent returns within a year or so. The UAE government needs to take immediate measures by injecting huge liquidity into the markets and should also set up stock market funds as suggested in the meeting by NBAD fund managers. The companies should also be allowed to buy back their shares in the market so 'buying behaviour' is encouraged.
Owais
London
No intervention
Let the market forces prevail. I didn't see anyone crying for government intervention when they were doubling or tripling their money virtually overnight. So why cry now? If you feel compelled to look at how your investment is doing every day, there is a probable disjoint between the riskiness of your investment and your risk tolerance. Never invest more than you can afford to lose and never invest in something that is going to keep you up at night. Many will ignore this advice though, due to the greed factor.
A reader
by Email
Educate investors
In my opinion, the real question should be why the markets have rallied so much in the past two years and not why they have been in a recent slump. I just looked at a three year graph of the DFM index and by drawing a simple trend line I can easily see that the current level is where the market should be at, and that the growth over the past two years is just unbelievable and should have raised a lot of questions and concerns from investors. Unfortunately, the laws of supply and demand and the "herd mentality" have prevailed in this market. Simply put, there were very few stocks being traded and an abundance of investors who wanted to get in and "get rich from the market". This could easily be seen from the oversubscription levels that IPOs enjoy in Dubai. People hear IPO and just bought the stock without really questioning the fundamentals of the company and what the company was going to do with all the money it was raising. There is obviously a lack of investor awareness which should be remedied by educating people further about the stock market to allow the market to behave more rationally. It is indeed very ironic that this market crash is very similar to the one that occurred with the tech bubble in the US and even the Far east crash of 1998.
Sameh
Toronto
Lesson learned
While long term the UAE stock markets have a fantastic future to look forward to, valuable lessons are to be learned in the short term, to enable this long term future; For worldwide Fund Managers to take any bourse as a viable investment, quoted companies have to be run in an internationally recognised manner - complete with visibly accurate, audited accounts and backed by a structure of commercial law. The UAE is a country still in its infancy in many economic areas, and while it races to catch up there will be 'glitches', of which the recent stock drop is one. It is better for the drop to have happened now as it will assist the pace of progress towards the UAE bourses becoming a respected and mature one - by each quoted company and the bourses looking at how they can develop themselves in order to gain respect from the worldwide market. For the government to intervene in the market to assist investors would be tantamount to suicide for the prospective future respectability of the UAE bourses.
For investors, it is indeed a lesson learned. For individuals to borrow from banks to invest appears to be a great idea while the sun shines on the market. As soon as storm clouds appear such as now, the futility in these borrowings is only then realised. No investment is encased in stone. While short term enthusiasm for immediate profit raises a market, sooner or later common sense for true value and risk of the investment comes into play. There is no doubt that this common sense has now turned to fear and panic as the market indeed over corrects itself. But these are the demons of a boom - bust economy. A warning that the Dubai property market should heed.
Dean
Dubai
Don't panic
It is a common law of nature, what goes up, must come down, and similarly, what comes down, goes up. No need to panic, it may take some time, but eventually the markets will go beyond the highs it had witnessed in 2005. Another six months and everyone will be running to invest once again in the Market.
Mohammad
Dubai
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