x Abu Dhabi, UAETuesday 23 January 2018

Paying the price for equities risk

Stock market investors - some of whom are losing hundreds of thousands of dirhams a day - are urging the Government to help.

Traders have little to celebrate as local markets continue to fall.
Traders have little to celebrate as local markets continue to fall.

The human cost of plunging stock markets is beginning to take a heavy toll on those in the thick of the worst trading conditions the country has experienced. Stock market investors - some of whom are losing hundreds of thousands of dirhams a day - are urging the Government to step in to calm the beleaguered stock markets. Both the Dubai Financial Market and Abu Dhabi Exchange have continued their downwards slide. In the past 24 hours, the DFM has fallen 5.48 per cent and the ADX 5.67 per cent.

"I lost Dh110,000 (US$29,948) in one day yesterday, which is becoming normal in the business these days," said Ali Ahmed, an Emirati businessman who owns a distribution firm. "I came back from a one-week business trip and it's obvious that there is no longer the same feeling of comfort in the market." With the DFM falling more than 60 per cent and the ADX more than 30 per cent this year, the lives and personal fortunes of many regional investors have been seriously affected.

Masoom Khan, a Bangladeshi investor, has seen his Dh1.7 million portfolio depleted to Dh500,000 in just three months. "I have forgotten about my investments. If I think about it I will have a heart attack," he said. Mr Khan, however, said he had decided to stick to his investments and wait for the market to bounce back. "I know it will be a long hibernation for me. But I can't lose my life's earnings here," he said. "The recession will be over one day."

Despite his losses he is realistic about what caused the crash and is optimistic that his net worth, and that of the market, will one day turn around. "We took the gamble by investing, didn't get out in time and now we are paying the price," he said. Frank Mitthais, a stock market veteran, has lost thousands of dirhams trading on the DFM. "I had a portfolio of Dh250,000 a year back, sold everything and salvaged Dh50,000," Mr Mitthais said.

"I don't know who to blame. Nobody factored in a global recession. The flight of capital, liquidity squeeze and a slowdown in world markets are all responsible for what is happening here," he said. Stock speculation has also led some investors to pump all they have into the markets, only to see it plummet days later. And once shares start to go down there is often no way to recover. Maha al Haj, the wife of an Emirati businessman, said she angered her husband when she sold one of their properties in order to invest in the market based on tips from a friend in the business.

"I have lost so much already, but I'm still coming back in case there is a chance the markets will go up again," she said. "It's difficult to leave, but I feel guilty and am not sure what to do next." On Dubai's trading floor, rather than displaying anger and distress at the battered condition of the equities market, many investors sit slouched on leather sofas looking resigned, disappointed and concerned that conditions could deteriorate even further. Some sit and chat quietly to one another, their eyes darting back and forth towards red flashing lights on the screen, while others pace up and down the trading floor.

"People are choosing to keep their money in case the market goes down further at this point," said Abdulla al Rahman, a businessman who frequents the DFM's premises daily. Asked about Emaar Properties' stock, a bellwether for the status of the market but the second-worst performing stock on the index - down nearly 78 per cent this year - Mr Rahman said it could actually be a good time to buy if anyone has the money. "The question is, do people have the cash now?"

afoxwell@thenational.ae shamdan@thenational.ae skhan@thenational.ae