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Investors fume over DIB price adjustment

Amidst the falling share prices, the investors were confused over the price adjustment of DIB shares which factored the increase in capital on account of rights and bonus issues. Price adjustment for rights, bonus and dividend component in case of DIB shares came in for lot of criticism today, as many investors lost more than 7 per cent of their value between Tuesday's closing price of Dh30.40 and yesterday's opening price of Dh19.45. Investors were caught unaware when they came for trading in the morning that without having done anything their net worth in DIB shares could take a tumble by over 7 per cent; purely due to lack of clarity with respect to price adjustment.

For investors who bought DIB shares on Tuesday at Dh30.40, the average holding cost after rights issue adjustment worked out to Dh17.25. Whereas the same shares if bought during yesterday's trading session would cost them less than Dh16.03. Both these are after considering bonus shares and cash dividend.

Investors complained that there has been total lack of clarity on calculations leading to unnecessary loss of net worth. Either DIB should have kept uniform record date for both rights and bonus/dividends or the rights issue adjustment should have been properly calculated.

Since rights issue will not be subscribed before March 4, 2006 — record date for bonus and dividend; investors complained that there will be no bonus or dividend on rights component leading to such a huge loss of 7 per cent.

“Last week there were some signs of liquidity returning to the UAE from other Arab markets. But with the high volatility in the market, many investors have turned fence sitters. Although some institutions accumulated shares earlier this week, many of them opted to take profits,” said a DFM broker.

Al Salam Bank's IPO which collected more than Dh26 billion (BD2.7 billion) in subscription seem to have attracted significant investments from the UAE. In addition about Dh3 billion locked up in Qatar's Al Rayan Bank IPO is yet to return to the market. Other regional IPOs such as Kingdom Hotels also has absorbed significant amount of money.

“The current market focus is more on IPOs. Apart from the recent regional IPOs, the eagerly awaited IPO from Emirates Integrated Telecommunications Company (EITC) is also expected to absorb huge quantity of liquidity. Although the market fundamentals are strong, the liquidity situation is likely to keep markets dull,” said P. Krishnamurthy, a Dubai based analyst.

The overall market turnover was down by 30 per cent yesterday at Dh2 billion. DFM traded 119 million shares worth Dh1.6 billion yesterday as Emaar and Amlak fell sharply by 4.7 per cent and 5.6 per cent respectively.

The services sector shares reported across the board fall in shares prices as newly listed Mazaya Holding and Public Warehousing Company slipped 3.4 per cent and 1.8 per cent, respectively as Tabreed and Arab International Logistics fell more than 5 per cent each.

In the banking sector, Emirates Bank and CBD fell 3.4 per cent and 1.9 per cent as Abu Dhabi listed banks fell in the range of 1.5 pre cent to 3.2 per cent with the lone exception of Abu Dhabi Islamic Bank which closed 80 fils up at Dh115.50.