Dubai: Stocks listed on the UAE’s bourses will have a limit down cap of 5 per cent from 10 per cent, the Abu Dhabi and Dubai markets said on Tuesday.
The new cap means that share prices of each company can only drop by a maximum of 5 per cent, compared to the earlier 10 per cent, and is effective Wednesday (March 18). The limit up will remain 15 per cent. The move comes as the bourses attempt to limit losses amid a free fall in share prices due to concerns about the coronavirus outbreak.
The Dubai Financial Market (DFM) and the Abu Dhabi Securities Exchange (ADX) said in separate statements the move is in line with the decision by Sultan Bin Saeed Al Mansouri, the UAE’s Minister of Economy and the chairman of the Securities and Commodities Authority.
Essa Kazim, chairman of the DFM, said that the bourse is keeping a close eye on market developments in order to “take all the necessary actions to contain fluctuations, especially the recent fluctuations due to the coronavirus.”
“Today’s measure is a result of DFM and SCA’s joint efforts to contain these fluctuations. The DFM will observe the implementation off the new fluctuation band to take any potential measures and amendments in line with the market circumstances,” he said.
Meanwhile, ADX commented on the move saying that it comes “in light of the global turbulences that have recently affected many financial markets,” and that the cap will remain limited at 5 per cent “until stability returns to the financial markets.” It added that the decision is also in the interest of protecting the savings of investors.
Stocks on the bourses have lately been deeply in the red, with many including powerhouses such as Emaar falling by 10 per cent on a regular basis as the number of coronavirus cases rises globally. The DFM and ADX trading floors are currently closed to limit large gatherings, but trade is continuing digitally.