News Column

Panic selling drags Dubai index down 6.7%

June 24, 2014

Naushad K Cherrayil Staff Reporter


UAE's stock market indices suffered their biggest losses as fall in Arabtec shares triggered a chain of margin calls that forced a broad sell-off.

Dubai's benchmark index plunged 6.68 per cent, the most since August 2013, to 4,009.01 points while Abu Dhabi's ADX index closed 3.32 per cent down at 4,553.31 points, its biggest drop since January 2011.

Arabtec, which has the fifth-highest weighting in the index, closed down 9.8 per cent on Tuesday at Dh3.12, its lowest since January 30, after the company confirmed it is cutting limited staff following the resignation of its chief executive Hasan Ismaik last week.

The property developer has plunged 52 per cent this month and $6 billion has been wiped out of Arabtec shares this month alone.

"The market was exposed to panic selling after retail investors pushed most shares higher earlier this year and end of last year," Marwan Shuraab, fund manager and head of trading at Vision Investments, told Gulf News.

He said that Arabtec saga has hurt investors' confidence and the share has tumbled its daily 10 per cent ceiling for a third session in a row.

Even after the DFM index has lost 20 per cent from May, it is still the best performer globally after Argentina's Merval index at 18.97 per cent.

"What we are seeing today is a reversal of the trend and a panic selling, in addition to triggering margin calls," Rami Sidani, head of investments at Schroders Mena.

Meanwhile, a member of the Federal National Council yesterday (Tuesday) demanded that the Securities and Commodities Authority (SCA) apply more scrutiny to the market to eliminate illegal trades.

Ahmad Mohammad Al Shamsi, a member from Ajman, told the House it was extremely crucial all companies maintain the credibility needed to put the UAE on a firm footing to attract international investment.

"Small investors have suffered great losses recently as UAE-listed firms make sharp movements up and down the stock market for no apparent reason," Al Shamsi said.

The FNC member said disclosure is very important for public joint stock companies and it must be equitably shared among all stakeholders and must be made on all the works of the company, including its financial situation, performance and ownership.

_ With inputs from Samir Salama, Associate Editor

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: Gulf News (United Arab Emirates)

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