Black Tuesday for UAE financial markets
Kuwait News Agency (KUNA) - 14/03/2006
DUBAI, March 14 (KUNA) -- UAE's financial markets followed the downward trend of the markets of Kuwait and Saudi Arabia, and this "Black Tuesday" brought with it unprecedented losses with most shares coming close to the lowest permissible drop of 15 percent.
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Losses of the markets of Abu Dhabi and Dubai reached USD 11.3 billion after the joint market index fell 6.2 percent and closed at 5,103 points. The number of traded shares was 180 million at USD 435 million sealed through 13,154 transactions.
Out of 92 listed companies, the shares of 59 were dealt, which only three companies making any profit. The shares of 56 companies witnessed losses and the rest remained unchanged.
Dubai Financial Market fell 11.7 percent after loosing 81 points and closing at 611 points. As for Abu Dhabi Stock Market, it dropped 4.4 prevent after shedding 186.7 points, thus closing at 4,021.
Faced with these losses, many traders in Dubai and Abu Dhabi broke down, as many financed their share dealings with bank loans and had now been left with nothing but the bank loans.
Once such dealer, who preferred to remain anonymous, said that he had invested USD 817,000 in the Dubai market and that he had taken out a loan for USD four million, adding that today's losses had gone with his money and a quarter of the bank loan. Of the 24 companies listed in the Dubai market, the shares of 22 witnessed losses, with one remaining unchanged and one, Dubai National Insurance, making profit.
As for Abu Dhabi Securities Market, out of the 35 companies whose shares were dealt today, the shares of 32 suffered losses, with only the shares of the National Bank of Abu Dhabi and the International Fish Farming Company making profit.
Ironically in the Dubai market, there were no registered share purchase requests for 25 companies at closing. Financial experts say this is an indication that swift intervention was necessary.
As for Emmar Real Estate Company, whose shares were expected to profit today as it was the last day for distributing monetary profit approved by the company, also fell USD 4.4 per share in the morning and closed with a loss if USD 4.2.
Market sources said this sharp fall of stock process was an indication of the lack of liquidity even if underwriting numbers showed otherwise, adding that there was no longer liquidity after it was given out during underwritings and to increase capital, thus flowing from the market to shareholding companies and banks.
Experts and investors called upon the government to take measures to halt new underwritings and capital increase operations until regulations are reviewed and the situation is contained.
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