UAE markets tumble as regulator halts four prominent investors

Investors’ trades were reviewed by the authorities and they were found to have committed violations.

The UAE’s stock markets fell on Tuesday as oil prices continued to drop and the federal market regulator halted four prominent investors from trading on the country’s stock exchanges.

The Dubai Financial Market General Index fell 5.4 per cent to 3,752.79, while the Abu Dhabi Securities Market General Index lost 2.18 per cent to 4,444.03. The Dubai Index was the worst performer on Tuesday among more than 90 indexes tracked globally by Bloomberg.

The Dubai measure has lost 13 per cent of its value this month, while the Abu Dhabi market has shed 5 per cent. The panic selling started in mid-November as the rapid decline in oil prices triggered concerns over economic growth in the UAE.

The contractor Drake & Scull International and Islamic Arab Insurance Company (or Salama) both fell by 10 per cent in Dubai, leading the losers, while in Abu Dhabi, the insurer Al Buhaira National Insurance Company and real estate firm Eshraq Properties also dropped by 10 per cent.

Brent crude retreated about 2 per cent to US$56.74 a barrel in afternoon trading, its lowest since May 2009.

The oil price has fallen by about half from this year’s high of US$115 a barrel reached in June, due to an oil supply glut, weaker demand from Europe and Asia, and a stronger US dollar. Oil is sold in US dollars.

Yesterday’s stock market decline coincided with news that the Securities and Commodities Authority (SCA) has prohibited four prominent investors from trading in securities, according to an SCA spokesman.

He declined to name the investors, or reveal the reason behind their prohibition from stock trading activities.

The spokesperson confirmed a report in the Arabic language newspaper Al Bayan, which said the investors’ trades were reviewed by the authorities and were found to have committed violations without elaborating about the breaches.

The authority, the paper added, asked for detailed information from brokers in the market about the trading activities of several important investors, and whether they conducted those trades themselves or through investment funds.

The move is another step that the authority is taking to clamp down on market manipulation and other illegal activities that may have contributed to the slide in UAE equities.

“The SCA is on top of things and is taking measures to control things.

“This is a right step to bring back credibility to the stock market,” said Nabil Farhat, a partner at Al Fajr Securities in Dubai.

“SCA will start investigating illegal conduct in the stock market. These are not the only ones.

“There are other people. We should not concentrate on individuals. It could be funds. It could be foreign investors.”

The SCA has been seeking to stem the slide in the stock market that has been triggered by panic selling from retail investors amid reports of short-selling fuelling volatility on UAE bourses.

The SCA has warned banks and brokers that short-selling is illegal.

The authority said any short- selling activity would be subject to fines and legal enforcement. Short-selling is the practice of selling borrowed shares in the hope of buying them back later at a lower price returning them to the original owner and keeping the difference. Brokers have said that foreign investment banks helped exaggerate the fall by taking short positions on local stocks.

“Foreign investment funds are entering the market as speculators.

“There is also the practice of short selling. If you want to invest in the UAE, you need to abide by the UAE’s rules and regulations,” said Mr Farhat.

dalsaadi@thenational.ae

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Published: December 30, 2014 04:00 AM

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