Abu Dhabi: Margin buying is one factor that has left investors reeling from the financial crisis that has gripped the markets, seasoned players at the Abu Dhabi Securities Exchange told Gulf News on Tuesday.
"Margin buying is what landed most people in trouble", said Mohammad Ali Khoury, an Emirati investor who has been dabbling in shares for a few years now. "Some people put in Dh100,000 and buy shares worth Dh1 million using margin facility. When the market is high, all is good but when the market goes down, it totally kills you. They start clocking you and if you cannot come up with money within the right time you end up losing badly. This is what happened to most people during the last week," he said.
Al Khoury manages his family business and invests on his own steam. "Some of those who use the margin are greedy people. They ended up suffering badly because, with the margin facility, even the slightest market fluctuation could cause significant harm. It is too risky".
Abdullah Mohammad Saleh, an Emirati investor, said: "Greedy people try to buy more shares than they can actually afford. When the market is down, they lose it all. There are people who put everything on stake - their belongings, wife's jewellery, everything. All of them seemed to have disappeared from the market since they are in no position to wait till things get better."
Abdul Jalal Abdullah Hussain Al Khoury, a high-profile Emirati businessman and investor, said he lost millions during the low days last week after investing using the margin facility.
Calling himself an aggressive investor, Hussain said he would trade shares several times each day. "Despite my shares suffering over the past week, I advise investors to keep some shares in the UAE stock market, since the dirham is far more stable than the dollar. What happened this past week will not stop me from investing," he said
Mohammad Al Moharami, an Emirati government official, saw 30 per cent of his savings wiped away. "The market is fluctuating, and I knew that I would lose some and gain some. During the last few days, I have regained 15 per cent out of the 30 per cent I initially lost. I would advise people to wait till the market is globally stable before investing again. With Dh1 million, you can easily chose to buy shares for Dh5 million if there's moderate market stability."