If there is one complaint heard too often by stock market investors in the Middle East, it is there is no “long position” here. Most of the trading on the Dubai (Dubai Financial Market) and Abu Dhabi (Abu Dhabi Securities Exchange) markets is focused on what money can be made today. Investors seldom focus on what a company will be worth over the long term, instead tending to focus on daily fluctuations — or simply holding on to stocks in the hope of big dividends.
And why shouldn’t they? Since 2014, neither market has given long-term investors much to bet on. Anyone who bought into the markets in the boom years of 2006-2008 is likely still in the red. This has developed into a cyclical problem, with companies holding off any new IPO until markets mature and institutional investors shying away without any new reasons to invest in a stagnant market. The clearest example of this was just last week. Despite solid results from companies on both exchanges, both markets are down for the month. Investors in general are disregarding annual performances and instead focusing on global influences, such as oil prices. Investors would do well to remember what equity markets are for. They are not casinos. Companies, too, should bring quality assets to markets to bolster investor confidence. Unless this begins to happen, this market stagnation will continue and companies looking to raise funds will instead go to markets in London and Europe, depriving the Middle East of its own growing markets. The Middle East, and the UAE in particular, should be a place that allows local companies to raise funds, grow their companies, and develop their economy. The short game will get us nowhere.
