UAE must curb hot money flows into stocks: Official :: Reuters

Quote:

UAE banks lent just under the equivalent of 150 per cent of the country's gross domestic product to investors looking to participate in two IPOs in March. Both were heavily oversubscribed.

While Saudi authorities tightened lending curbs last year, the United Arab Emirates relaxed its credit rules in March to ease the liquidity crunch created by the two IPOs which analysts blamed for the market slump.

Credit rating agencies are divided over the impact of the stock market slump on the Gulf banking system. Moody's Investors Service warned earlier this month that systemic risks were building in the banking system due to the stock market downturn, an explosion in credit and inflated real estate prices.

Meanwhile:

In a step forward towards the diversification of its investment portfolio, the Abu Dhabi Retirement Pensions and Benefits Fund (Fund), announced today its decision to invest in local listed shares in the UAE.
. . .
Commenting on this investment initiative, Mubarak Rashed Al Mansouri, the Fund's Director General said: 'This decision was taken in light of the recent broad decline in share prices in the UAE, as the current valuations represent a good entry point for long term investment by the Fund.'

Previously, due to the persistent rise in market valuations in 2004 as well as in 2005, local investments were allocated to founders' shares in Initial Public Offerings (IPO), and private placements that were deemed to be more attractive than listed shares.