Dubai stocks crash again

Abu Dhabi: Sustained negative sentiment pushed UAE stocks lower yesterday with the Dubai Financial Market poised to fall below the 500-point mark very soon.

Analysts say the markets are unlikely to rebound until long-term investors step in and companies start buying back shares.

The benchmark Dubai Financial Market index fell 4.75 per cent or 25.72 points to close at 516.26 points, the lowest since the last eight weeks. Turnover was moderate at Dh1.257 billion with some 149.9 million shares changing hands in deals totalling 10,982. Of the 19 companies traded, expectedly, losers (15) were higher than gainers.

"The way the market is going, the DFM index may go below the 500 points level soon," said Ziad Al Dabbas, domestic capital markets manager for National Bank of Abu Dhabi.

"Now it is important to save the market and allow companies to buy back shares. That may create demand and build up confidence levels, dispel fears and so on. The Ministry has to act fast."

All indices dropped at DFM with the investment index registering the highest fall at 7.63 per cent.

In Abu Dhabi the index closed at 3,561.13 points, down 2.75 per cent, with only the hotel index staying in positive territory.

"The confidence of investors is shattered and we are seeing a continuous slide and the speed of it in the last two weeks has surprised a lot of people, resulting in bigger margin calls that have occurred faster than anticipated and many couldn't cover their positions," said Mohammad Ali Yasin, chief of brokerage Emirates Commercial Centre.

"Too much leverage (lending against stocks) by banks has inflated the market and it has also brought the market down. The exact amount of leverage must be known and maybe the Central Bank must ascertain this from banks and then devise ways to release pressure."