By Alex Delmar-Morgan
Duwaji says shorting by offshore investors responsible for financial turbulence in Gulf.
Shuaa Capital chief executive Iyad Duwaji on Sunday blamed the recent financial turbulence in the Gulf on short-selling by offshore investors.
The boss of the UAE’s largest investment bank said investors who used shorting techniques - in which traders profit when a stock price goes down - have eroded sentiment in the region and driven markets down, forcing a mass sell-off.
“This [shorting] is a new phenomenon. By shorting the market, that caused a further drop, which caused further aggravation because once the market dropped a certain amount, this forces people to liquidate their positions. This is a typical snowball effect,” Duwaji told a press conference in Dubai.
Duwaji also blamed the strengthening of the US dollar in the last couple of months, which caused European and British investors to sell the dollar-pegged dirham.
Duwaji refused to predict when Gulf markets will recover.
Shuaa has been hit hard by the current market turmoil. The company's shares are down more than 50 percent since the beginning of September.
Shuaa on Friday reported a first half loss of $101 million compared to the same period last year. The company said the loss included $20 million in writedowns linked to the collapse of US investment bank Lehman Brothers.
The company's share price dropped 8.49 percent on Sunday to close at 2.91 dirhams.
I don't think Shuaa has any moral right to blame anybody. Anyway that is irrelevant, but I think it is childish to blame others just to cover up a big hole in your pocket! Does Mr.Iyad expect us to believe that Shuaa made a loss of USD 100M due to shorting practices of off-shore investors?? Sorry, but I don't think it is a good excuse!!!
Oh grow up! Good old offshore investors again- there when you want them. Nothing to do with investors on the DFM. Read the newspaper interviews with the typical local market player; it makes one's hair stand on end. They shouldn't be allowed to buy candy let alone stocks. if Mr Duwaji would care for a round or two in a public forum debating the naÃ¯vetÃ© of his comments I would be very happy to oblige