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Dubai: A staggering Dh110 billion has been wiped off UAE stock markets since the beginning of September as investors reel from a perfect storm of global uncertainty, yo-yoing commodity prices and a series of corruption scandals plaguing prominent real estate and financial corporations.
And a traditional pre-Eid selloff on Wednesday added to the mounting losses.
With doubts emerging over the US government's efforts to stem the financial crisis, there's little respite for bewildered investors.
"Investors are now very cautious about taking positions in the market not knowing whether more bad news will be coming out," said Tariq Qaqish, fund manager at Al Mal Capital.
"With international markets volatile, everybody would prefer to sit on cash."
Also, the news of Shuaa Capital, the UAE's largest investment bank by market capitalisation, being investigated and later in the day indicted by the Dubai Financial Services Authority for manipulation of DP World shares, added to investors' concerns.
"Every few days you hear about some investigation into corruption and today it is Shuaa. It does affect the short-term sentiments of the investors," said Sherif Mahmoud Salem, a fund manager with the National Bank of Abu Dhabi.
"It adds to the negative sentiment prevailing in the market."
The Dubai Financial Market General Index dropped 3.97 per cent to close at 3,890.16. In the last three days alone, Dubai has lost 12.07 per cent. The Abu Dhabi Security Exchange Index yesterday fell 2.29 per cent to end at 3,811.08.
In Washington, a battle over the US government's financial rescue package continued in Congress on Wednesday.
Federal Reserve chairman Ben Bernanke and Treasury Secretary Henry Paulson, testifying on Capitol Hill after proposing the $700-billion bailout just days ago, argued that lawmakers must pass the emergency measure quickly or put the entire US economy at risk.
In Berlin, International Monetary Fund Managing Director Dominique Strauss-Kahn tried to paint a rosy outlook.
"As things look now, neither the US economy nor the global economy will slip into recession," he said."
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