Advices against knee-jerk reaction
UAE businessman and philanthropist urges investors in the United Arab Emirates to tread with caution but not to over react to current volatility/panic in the market. The Chairman, who is also Chairman of Dubai National Insurance & Reinsurance (DNIR) says that our markets don’t need speculators.
“Speculators are unwelcome here,” he said. “We are seeing a knee-jerk reaction to the sudden drop in oil prices last week, and some investors are unnerved. But there is no need for panic. Just because some investors sell shares at lower prices for whatever reason, others shouldn’t necessarily follow this path. The majority of the investors, who have the holding power, and those who are not short term speculators, don’t get affected. The problem is; investors who have highly leveraged positions are under pressure to repay their loans and hence start selling.”
Al Habtoor added, “Investors panic when prices drop. They take their money, make losses and run. This is wrong. Our economy is strong and climbing. Investors should look at the market with a level head and at the fundamentals of a company before making hasty decisions and not just rely solely on market rumours.”
“On a daily average, the trading volume is less than 0.25 per cent of the total volume of the listed shares in the last 10 days on the Dubai Financial Market. This shows that the vast majority of the investors are not affected or panicking,” he said.
Al Habtoor used the example of DNIR. “For instance, on 14th December, DNIR was named one of the ‘biggest losers’ of the day on the DFM. This a misleading statement based on a small, single transaction of 10,000 shares on that day. The fact is, 10,000 shares equate to only 0.008 per cent of the total shares of the Company. This insignificant transaction should not be used as a yard stick for bringing down the market capitalisation of a strong, well performing company.”