It is clearly not a good idea to lose your pool of analysts

For all who believe transparency is the lifeblood of a healthy financial industry, the demise of the investment analyst community in the UAE is a depressing development.

A good investment analyst is one of the most important cogs in the cycle of raising money and spending it wisely that is the raison d'être of financial services, indeed of all business activity. Without them, the process becomes more opaque, confusing and open to abuse.

From a self-interested viewpoint, analysts are also among the best sources a financial journalist can have. They understand the industries and sectors in which they specialise and are usually able to transmit their expert views in a digestible and accessible way. Good analysts' research is vital to good business news.

This is especially true in the Middle East, where the default position of many corporates is to provide as little information as possible on their business, especially in the "bad news" part of the cycle that has been the norm for the past few years.

Research analysts are a key part in the process of keeping the investor - from the man in the street with a few thousand dirhams to punt, to the professional institution with billions under management - well informed and well armed to make important investment decisions.

But the UAE is at risk of losing the indigenous, locally based store of specialist knowledge these experts possess. All around, the signs are that many investment banks and boutique financial houses believe they can do without local analysts.

Recent developments at Rasmalah, a mini-investment bank with a well-regarded research unit funded by Royal Bank of Scotland (RBS), have reinforced the trend. RBS, owned by the British taxpayer, has decided to close the Rasmalah unit.

Other finance houses based in the UAE have gone the same way recently.

Analysts have been among the main victims of the job losses at Shuaa Capital, and elsewhere there is a steady drip of research jobs being cut.

The local firms appear to have left the field to the major global institutions that deploy armies of analysts around the world. Banks such as HSBC, Goldman Sachs, Merrill Lynch and Deutsche still have big research capability for the region. (HSBC has 21 equity analysts in Egypt, Saudi Arabia and the UAE covering 141 regional stocks.)

Other global players, however, have decided it is not worth the effort. Nomura and UBS have pulled out of the locally based equity research business altogether; Credit Suisse has slimmed down dramatically.

Even in the biggest firms, there has been a trend to repatriate analysts to the banks' home turf, or ship them to another centre where research is being "consolidated". It may make financial sense, but it seems crazy to have to call an analyst in Moscow to get information on a Dubai-quoted stock.

The cutbacks and rationalisations are the result of a hard-headed approach to costs in the aftermath of the financial crisis and the economic fallout from the Arab Spring.

Research departments are easy targets as cost centres - expensive teams of analysts pumping out information without making an obvious contribution to the bottom line.

Because of the "Chinese walls" between them and other parts of the investment institutions, they are isolated and easily identifiable, rather like the advertising or marketing budgets - luxuries that can be afforded in boom times but the first to go in an age of austerity.

But it is a false economy. Apart from the damage done to the banks' intellectual credibility, it would probably cost more to rehire those people if and when the cycle picked up again.

Ironically, the news about Rasmalah came just as volumes on the Dubai Financial Market were soaring.

Some experts argue it is time to remodel the whole structure. Other information providers, such as newspapers, media websites and management consultants, charge for their services, and - in some cases - make a healthy profit.

But until a clear alternative emerges in the knowledge industry, there is no real substitute for good, honest investment research, even if it comes with a big bill.