Monday, August 29, 2005

Dubai Islamic Bank share manipulation :: KT

The Khaleej Times reports:
DUBAI — Widespread manipulation of Dubai Islamic Bank stocks by two operators prompted the Dubai Financial Market to cancel all trades in the bank’s shares yesterday. Following an investigation, DFM has found that most of the transactions on DIB were from two investors who manipulated the share prices. Although the DFM has not identified the two operators, market sources said these are two large institutional brokers — one of them closely linked to a leading bank.

The cancellation of trading will mean Saturday’s closing price is the last price of DIB share. The bull-run on Dubai Islamic Bank (DIB) counter yesterday saw its turnover hitting a new record high of Dh9.34 billion, 55 per cent higher than the highest ever market turnover reported in UAE and one of the highest ever daily turnovers in the world recorded on a single counter.
. . .
“The UAE market is facing a strange phenomenon of high liquidity and very low level of market sophistication. While on the one hand the there is huge potential for growth, the investors and brokers are not adequately educated to deal with a situation such as these. Low level of business ethics in the market can also work against the credibility and future growth of investments,” said P. Krishanamurthy an investment analyst.

From Reuters' coverage:
Shailesh Dash, head of research at Global Investment House in Kuwait, said it was encouraging that authorities acted promptly. "If these types of practices are allowed to go unchecked, they can certainly undermine confidence in the market," he said. "But the authorities appear to have acted quickly and that is a good thing, especially at a time when a lot of international investors are taking an interest in the Dubai market and in markets across the Gulf," he said.



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