Investors offload Amlak, Tamweel in blackmarket

Brokers in the UAE holding Amlak and Tamweel shares have been forced to trade these on a “blackmarket” that has emerged for these stocks.

Trading in shares of both the mortgage giants in the UAE have been suspended since November 2008 and brokers told Arabic daily Al Ittihad that this has severely affected liquidity for many of their clients – forcing the move to sell on a blackmarket.

Wa’el Abu Muhaisin, General Manager, Al Ansari Financial Services, confirmed the existence of a "black market" for the trading of the shares of these companies.

He adds that the prices in this market may not be fair as “these are not subject to the laws of supply and demand”.

Hamoud Abdullah of Emirates NBD called for the resolving of the Amlak and Tamweel issue as soon as possible.

Abdullah said, “We do not want credibility to be affected negatively in the local capital markets.”

He added, “Several official statements issued suggest a solution, but none have been provided so far. There are many companies whose shares prices are down to 50 fils, but these have not been stopped from trading. Amlak and Tamweel are making profits now."

Muhaisin stresses that the fears of a decline of share price do not justify the suspension of trading for two years without a solution.

Abu Muhaisin says that the shares held by retail investors in these two companies often represent their whole capital and since the cessation of trading, they are now facing financial problems with the banks.

Wadhah Al Taha, a financial analyst, says, “The sudden suspending of dealing in the shares of these two companies and the continuation of this situation for about two years has had a negative impact on the overall level of confidence in the financial markets.”

Al Taha points out that many solutions and several statements were made, but the situation continues.

Al Ittihad cites experts saying that one solution proposed was to merge the two companies with the Land Bank and the Emirates Industrial Bank, to establish a finance company with a big budget.

However, reports indicate this solution was abandoned and gradually the idea of leaving the fate of the two companies to a government committee charged with studying the most appropriate solution has been chosen.

Merger procedures between Amlak and Tamweel were expected to begin in January 2010, pending approval of shareowners.

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