December 24, 2005
The bubble bursteth?
A Christmas crash for soaring sandland stocks:
Retailers dump UAE stocks
Posted: Friday, December 23, 2005
Dubai: Retail investors put the skids under UAE shares and drove the Dubai market perilously close to the 1.000 point level that analysts say could trigger an institutional sell-off.
The Dubai index, which has fallen steadily since hitting a record high on November 9, closed 4.79 per cent lower at 1,003.72 points. The Abu Dhabi index finished 3.03 per cent down at 4,984.21 points.
Brokers said retail investors were behind most of the selling.
'There is real fear among the small, day traders. This is a clear sign that sentiment has turned,' said Mohammed Yassin of Emirates Capital Corporation.
In Dubai more than 78 million shares traded hands, just above the daily average for a week that has generally seen moderate volumes. The focus next week will be whether the market can keep the index above the key support level of 1000.
'If the index falls below that level then some institutions will have to start selling. I don't expect panic but there will be a gradual sell-off, which could exacerbate the correction,' said one fund manager. [Reuters]
TrackBack URL for this entry:
What's like the P/E (trailing) over there?
Posted by: matthew hogan at December 24, 2005 07:18 PM
About bloody time. When I was there for a conference even the asset management pimps based in Dubai were talking about valuations being too high.
You know when dubai finance pimps start admitting there might be overvalued assets that valuations have become not only ludicrous, but absurdly ludicrous.
P/Es were all over the place, I think you can get them at MENAFN or AMEINFO
Posted by: The Lounsbury at December 24, 2005 10:21 PM
The question comes to mind, what may have triggered the change in sentiment.
Posted by: The Lounsbury at December 24, 2005 10:25 PM
I'll check on P/Es.
An ignorant guess to me on a trigger would be that if valuations were very high, everyone is tense for a tumble, and any event, including something like Christmas where retail investors (I assume some significant amount may celebrate it) need sudden liquidity for that and/or other personal/business end of year purposes (tax, accounting to show profit or loss), would cause a sudden sell-off and then the computerized stop losses would kick in, both day trade and institutional. A snowball effect.
I think something like that happend with NASDAQ 2000, everyone knew valuations were psychotic and had to fall; the reason for it in April was, in addition ot Microsoft suit and continued higher interest rates by Fed, alot of people took their profits or losses about the same time to pay off April 15 taxes. Those sales all at once suggested the avalanche and through fear and stop-loss it became a self-fulfilling prophecy. I have heard that theory but cannot document.
In other words, Christmas or end of year common needs for cash may have caused an avalanche where everyone was primed for a fall and ready to sell when the first rumbles -- caused by private coincident needs -- came.
Posted by: matthew hogan at December 25, 2005 10:58 AM
About 40-50 p/e I think, though I may have misremembered that.
Posted by: waterboy at December 26, 2005 10:37 AM