Full disclosure needed for investor confidence

Confidence is the glue that sticks capital markets together. But investor confidence has dwindled to crisis levels and local markets have nearly screeched to a halt. While the US S&P500 Index was hit hard, with stocks crashing by 38.6 per cent last year, the UAE was hit harder. The Shuaa Capital UAE Index was down 66 per cent although earnings growth was estimated at 20 per cent last year. What can we make of this?

Of course, the global financial crisis has taken its toll on our market. However, many investors rightly attribute the lack of corporate transparency and disclosure, as well as companies “managing” their earnings, to the larger share price falls and increased volatility in the UAE markets than on western exchanges. This has also served to decouple company earnings from valuations.