# Dubai Stock Market Crash?



## malec (Apr 17, 2005)

http://www.gulfnews.com/business/Markets/10025688.html


Dubai stocks tumble in biggest single-day loss

By Stanley Carvalho and Arif Sharif, Staff Reporters


Dubai: Dubai's shares dived nearly 12 per cent yesterday, its largest fall in a single day in years, as bearish sentiment in Saudi Arabia and across the Gulf region triggered panic selling by local investors.

Abu Dhabi dropped more than four per cent, with 21 stocks hitting the lower limit, the maximum permissible 10 per cent daily fall, prompting some to demand government intervention to stabilise the market.

Saudi Arabia shares dropped 4.82 per cent after hitting the lower limit in intra-day trade, Kuwait fell 3.67 per cent, Bahrain 3.36 per cent and Qatar 3.33 per cent.

"The huge correction in Saudi Arabia and the fact that it hit the limit down again today caused investors to panic," said Haissam Arabi, head of asset management at investment bank Shuaa Capital. "Investors began selling in anticipation that Saudi investors would pull out of the local market".

The Dubai market index finished 11.71 per cent lower at 611.86 points, down 52 per cent from a life high of 1,267.32 hit on November 9. Abu Dhabi dropped 4.44 per cent to 4,021.26, having lost 30 per cent over the same period.

Mohammad Yasin, general manager at Emirates Securities, said brokers began calling back credit purchases when the Dubai index broke a technical support at 680. Analysts said 13 stocks hit new 52-week lows and nine, including Emaar Properties, hit the lower limit.


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## dubaiflo (Jan 3, 2005)

well this is more a general middle east crash and since dubai is one of the most active markets losses are higher.


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## Qatar4Ever (Feb 3, 2004)

Yuppi.. i told everyone the gulf markets are overheated.. but noooo.. no one listens.. u know what this means.. loool.. means i get to buy at dirt cheap pricesssssssssssss


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## Ben_Burj (Aug 28, 2005)

Well i am not suprised at all with two or three companies dominating the stock market this is far far far from being a suprise.


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## Dubai_Boy (May 21, 2003)

SERVES THEM RIGHT

i mean come on ! anyone hear about the new impossibly pathetic road rules ?


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## smussuw (Feb 1, 2004)

^ welcome back, stupid.

I think it is a good for Dubai Market in the long run as the shares prices were exaggerated.

I baught shares at a prices of 6 and they jumped to 16 and now back to 6, I dont think much of it as the number of my shares has been doubled after a new internal IPO.

Anyway, am I in the safe side as I rarely buy from the stock market and mostly stick to the IPOs.


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## DarkBlueBoss (Mar 3, 2005)

^^ lucky u, ur allowed to do that , some aren't


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## docc (Jun 30, 2004)

The Share market in Dubai is overrated and way too immature. People start selling the moment they see another selling, that isn't the way this is done! They should learn from stock markets like India and NYSE, thats just good business now!


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## smussuw (Feb 1, 2004)

We only had our stock market since 2001 I think, most of the investors are young and have money but know nothing about the market. It only became a fashion from last year.

You wouldnt expect them to act as professionals, give them 10 years maybe?


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## Dubai-Lover (Jul 4, 2004)

yep, it's too young and immature

most investors are private people and not companies hence the whole thing is instable

it needs to grow slowly and carefully or otherwise you will burn billions which has already happened

always be very careful with what you earn a lot of bucks with!!


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## Qatar4Ever (Feb 3, 2004)

ya rab it goes further down... doha market lost like 4% today.. !! beep beep


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## Dubai-Lover (Jul 4, 2004)

an article from the well known ITP mag


probelm is too many people invest for fun and not for the sake of business
too young and immature
every stock market went through this though!



Stocks back on the rocks
Sunday, 19 March, 2006

Investors have lost fortunes, and the outlook for equities is bleak.

The figures speak for themselves. The Dubai Financial Market is now 41.2% down on its year-end closing figure. The Abu Dhabi Securities Market is down 23% since the end of 2005. Markets across the Middle East have been falling fast, with the Saudi Tadawul down 20% in the space of one week.

So it is a crash? Technically, a 20% drop is a crash. So yes, this is a crash. Some optimists are still hanging on to the word “correction”, but whichever way you look at it, investors have lost a serious amount of cash. 

Yet the UAE Central Bank is predicting that growth will hit 8% this year, and inflation just 4%. Similar predictions are being made across the Middle East, with a number of analysts rushing to tell us that this is a great time to buy shares. Most of these are of course the same analysts that told us to do just that four weeks ago. Those of us who took their advice are likely to be hanging on to heavy losses at best. 

The truth is that the region’s stock markets are in a state of panic. Or to be precise, panic selling. The boom in equities was always – as it always is – a false one. Few companies can ever really justify the meteoric rise in their share prices, but such events led in the past year to panic buying – artificially inflating the price of stocks. It took the recent results at Emaar, which under close scrutiny show a fall in fourth quarter earnings, to inject a dose of reality into the markets.

And that reality is that no boom lasts for ever. Central Banks are correct to predict continued growth in regional economies: the Arab world has a lot to be proud of, particularly in construction and technological growth. There is still a lot of money to be made, especially in real estate. Other investment opportunities are springing up by the day and will keep on doing so.

But as for investing in the stock market, don’t expect a sudden upsurge. It hasn’t happened in previous weeks. And it isn’t about to happen now. No matter what the analysts will tell you. History suggests that the last burst in the stock bubble, back during the technology boom in 1999, was a result of greed on the part of investors. Everyone wanted a piece of the same action. 

This time around, hopefully lessons will have been learned. Now is not the time to buy. Not just yet.


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## Naz UK (Jan 28, 2006)

Did someone just put the Indian stock exchange in the same league as NYSE? Give me a break please!


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## BinDubai (Aug 31, 2004)

Qatar4Ever said:


> Yuppi.. i told everyone the gulf markets are overheated.. but noooo.. no one listens.. u know what this means.. loool.. means i get to buy at dirt cheap pricesssssssssssss



bro its not just because of that ,, the UAE the gulf is getting new Public joint companies and this process consume alot of the markets capital as an example Du <-- UAE second telecomunication provider got Dh400B thats i guess more than 100 times of what the initial figure was ,, so thats just one example ..
the stock market gained the ppl's Trust again after establishing Dubai and Abu Dhabi's financial markets after a crisis back in 1998 as there was no formal market and regulations to manage stock exchange.
in addition many investors decided to invest their money in the market while they were lacking the basic knowledge in this field
and ( al howameer la3been le3bathom using a simple equation "nazil al saham o eshterah ebre59")


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## Koweitien (Dec 26, 2005)

smussuw said:


> We only had our stock market since 2001 I think, most of the investors are young and have money but know nothing about the market. It only became a fashion from last year.
> 
> You wouldnt expect them to act as professionals, give them 10 years maybe?


2001 ?? you're kidding :eek2:


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## BinDubai (Aug 31, 2004)

actually 2000 not 2001  as a formal stock exchange pre 2000 stock exchange used to go on person to person based


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## Koweitien (Dec 26, 2005)

BinDubai said:


> actually 2000 not 2001  as a formal stock exchange pre 2000 stock exchange used to go on person to person based


I thought that it was much older than that


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## BinDubai (Aug 31, 2004)

Dubliner said:


> I thought that it was much older than that


as for the market i'd say no but on the other hand the (big fish) are well experienced as most of the Arabian capital used to flow to the US stock exchange  
so those guys know what they r doing


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## Qatar4Ever (Feb 3, 2004)

I agree. Your job is to examine closely what the big fish are doing and try to follow theyre every move. You may not be able to move the market but you sure can track the big movers.


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## Zorobabel (May 18, 2005)

Very poor planning on the part of most investors (casuals) is destroying the stock market.

---

*IPOs in the UAE: surely there has to be a better way!*

The initial public offerings for a second UAE telecom operator called Du, and the Tamweel mortgage company resulted in massive oversubscriptions. More than the GDP of the country, $184 billion, chased these two IPOs which drained liquidity and crashed the local stock market. Does it have to work this way?

The IPO system in the UAE is clearly in need of drastic reform. It a strange system that allows people to subscribe as much as they like to an IPO, and to borrow heavily from banks to do so.

What is needed is a system which still encourages investors to support IPO issues, but keeps the funds involved at more reasonable levels. Then there will not be the mass exodus of funds from the stock market to buy IPOs that is one of the explanations for the UAE share crash of the past couple of weeks.

Why not put some restriction on the size of subscriptions: an upper and minimum limit? Bank borrowing would then also be reduced pro rata, but further limits here might also be considered.

IPO pricing
The setting of IPO pricing is also something that the UAE Ministry of Economy and Finance ought to review. The Dubai International Financial Exchange has just put a different system in place for IPO pricing, in line with world standards, and the rest of the UAE could consider following this example.

The basic principle is that investment advisors determine an IPO issue price that just slightly exceeds market demand for the new issue. That way the company owners get a fair price for their stock, and the buyers obtain a small risk premium. And an orderly market is maintained at the same time.

For the fundamental reason that so many people apply for IPOs in the UAE is that they think this is a guaranteed way to make money. Indeed, it was until so many started to make applications that the returns became smaller and smaller, and with bank borrowing virtually nothing.

Stop new IPOs?
This week the secretary-general of the GCC Secretariat called for a halt to all IPOs until reforms were put in place. But many financial institutions are profiting from the present IPO system, in fact they may be the main beneficiaries right now, and so the pressure for reform is not from all the parties involved.

But logic suggests that reform of the IPO system is overdue, and the stock market crash should be a serious reminder that the flow of funds concerned is enough to cause systemic damage.

This is a more realistic suggestion than expecting IPO investors to take more interest in what they are buying. UAE investors, for example, seem unable to distinguish between a start-up company and a company with an established track record of delivering profits, let alone reading the prospectus.

But get the IPO system right and there is a healthy market for floating new companies in the UAE on the back of a dynamic local economy.


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## BinDubai (Aug 31, 2004)

Qatar4Ever said:


> I agree. Your job is to examine closely what the big fish are doing and try to follow theyre every move. You may not be able to move the market but you sure can track the big movers.


3alaik noor 
allah ey3een inshala bro


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