(MEBG) – With 90 percent of the trade on the UAE stock market is handled by few big investors and financial institutions, stock prices are not sufficiently driven by speculative forces, said a report prepared by the National Bank of Dubai.
Such circumstances culminated in manipulations, which drove prices to record levels in August 1998, before crumbling and leaving scores of victims. The market value of stocks being transacted now is approximately Dhs 100 billion, compared with a record of Dhs160 billion two years ago
The report suggests that the depression in the UAE stock market during the past two years came about as a result of low investor confidence. The report also said that the formation of a Federal Exchange Commission, the opening of the Dubai Financial Market and the news that Abu Dhabi will open its own bourse shortly, has had no impact on the market
The report recommended to the UAE authorities that they be more concerned about a healthy economic framework and let market forces decide the direction of the market. It explained that since the UAE is a service-based economy driven by public spending, only higher government expenditures could initiate a recovery. However, it conceded that financial markets are not likely to remain stagnant forever.
