Investors in selling spree

Abu Dhabi: Shaken by the global financial crisis, spooked investors are selling off their stocks on the Abu Dhabi Securities Exchange (ADX) at an alarming rate, which has led to erosion in share prices and the general index being dragged still lower in recent days, market participants told Gulf News on Thursday.

The ADX general index fell 1.22 per cent to 2,136.64 yesterday.

"In total, I have lost around Dh50,000 in shares. And just within a month, I have lost Dh7,000. I was investing all my savings and had even borrowed Dh100,000 from a bank to invest in stocks," said TS, a Leban-ese who did not want his identity to be revealed.

"Now I don't have any money left and I have to pay back my bank loan in installments every month. I feel so cheated, but I am helpless."

"Investors are escaping the stock market because when the prices of shares decreased, many decided to sell. Due to the heavy selling pressure, share prices are decreasing further," said Hamza Hassan Sulaiman, a share broker.

"I'm not sure when the market will stabilise. maybe it will take a year or two, depending on what happens. We have to wait and see," he said.

T Mathew, an Indian investor, said he had no choice but to hold on to his shares. "I am holding on to my shares, which were together worth about Dh1 million. If I sell now, I'll not get even 25 per cent of my money," he said.

Market players say businesses are incurring losses and that is affecting confidence that investors have in their shares. They also say speculators exited the market after reaping big gains, and when they squared off their positions, it led to a drastic fall in share prices.

Some of the worst affected ADX-listed companies are real estate developers Aldar Properties and Sorouh. They have witnessed a major drop in their market capitalisations in recent months. These companies were until recently, favourites of cherry-picking bulk buyers. Aldar's shares plunged 7.6 per cent yesterday to Dh2.48, the lowest since the company listed in April 2005.

Recently, ADX chief executive Tom Healy, while announcing a round-up of trading and investment statistics and achievements for 2008, said that last year was a mixed one for ADX. Performance for the first half of the year was exceptionally strong, but in the second half, all Gulf Cooperation Council exchanges succumbed to global events.

ADX, which serves the domestic cash equity market, has 65 listed companies and had a market capitalisation of Dh252.7 billion ($68.9 billion) as of lastDecember 31.