Tuesday, July 12, 2005

Investors blame Emaar and MEP for losses

BY HASEEB HAIDER

12 July 2005


ABU DHABI � After making billions overnight, the disgruntled share investors who now have got their fingers burnt in the recent stocks 'correction' blame the real estate developer Emaar and Ministry of Economy and Planning for their Dh9 billion price losses, which wiped out in a less than week's trading.

But, the cool and calm market analysts have linked the sharp fall in share prices induced by Emaar as a normal 'market mechanism', whereby abnormally inflated share prices readjusts at much lower levels at realistic values.

The meeting of Emaar's General Assembly, which was postponed to Saturday for lack of quorum, was seen as a negative move that would deepen tension in the stock markets, whereas investors were hoping that the meeting would come out with supportive measures to rescue the share prices, which had been unstable for over two weeks.

Adil Hosni, a share investor blamed the Ministry of Economy and Planning for the slump in share values. He thought it was to too slow in amending the law which stipulates the attendance of investors who owned 75 per cent of Emaar's capital, so as to constitute the quorum that would enable the General Assembly to hold shareholder's meeting, allow new IPOs, approve increase in the paid-up capital for listed firms in the stock markets.

He said: "This has resulted in huge liquidity being withdrawn from financial markets, in the past few days."

As predicted by the Investors, the postponement of the shareholders meeting has resulted in a fall in share prices, leading to 60 per cent loss in their value. Emaar's share declined 39.5 per cent to Dh42.5 dirhams. But, despite the surge of anger that had gripped investors, due to the postponement of Emaar's General Assembly's meeting, analysts say Emaar or any other institution could not be blamed for the market's ordeal, and that what had taken place was a healthy ratification of the situation.

Waleed Shuhabi, a financial analyst at Shua'a Capital, said: "Investors are rather unrealistic in their approach to the situation. They want the share price index to be at the ceiling and any slight decline in prices drives them to the brink of madness. They must come back to their senses. There is no market in the world that is on a continual rise".

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