Leveraged investors in the UAE are battling with margin calls and shedding their holdings in order to service these payments. Last but not least, negative perception created by recent news and rumours of arrests of executives from listed as well as unlisted companies for alleged fraud and malpractice has not helped stock prices. This erosion of confidence is an uncomfortable sign, especially when the fundamentals are rock solid. UAE Inc has largely performed better than it was expected to in the first half of this year, and prospects for economic growth – buoyed by consistently high oil revenues – remain high. Perhaps it is time the captains of UAE Inc stepped out of their ivory towers and communicated these positive factors with shareholders. The markets need to be reassured that the alleged malpractice is not at the cost of shareholders’ funds. Involving the shareholders in the growth of the company can restore a lot of the lost confidence.
Having said that, the fact remains that share prices have reached a level that looks extremely attractive. My sense is that if we have not hit bottom yet, we are close.