 
|
|
STOCK MARKETS NEED REGULATION
f the many things being discussed in our business world today, perhaps none is as glamorous as the calls for the setting up of a stock exchange. But as our economy evolves from its traditional trading base to a more sophisticated international one, such calls are no longer purely a fantasy or part of a wish list. They are a necessity and one that is based on reality.The fact is that we do have a stock market, unofficial as it may be. The fact is also that it trades and that millions of Dirhams are involved in that trade. What is also a reality is that it is unregulated. Nothing brought that closer to home recently than when the stock of the newly formed Dubai Investments Company rose up from Dhs 7 to a startling Dhs 11 in the space of a few days. And that when the company had not even done much by way of business enterprise. Such speculative behaviour is perhaps the greatest danger that faces the present state of the stock market today. Surely the memory of the Souk Al Manakh crash in Kuwait cannot have been forgotten that easily. That crash was triggered by over speculation and our market is also just as prone, if not more because of its unofficial status. The people who are most affected in such speculation are the ordinary investors who have sunk all, or a substantial part, of their life savings into such investments. All of their hard earned cash can be wiped out with just one serious fluctuation of the markets, leaving such investors in what could be, quite serious debt. Clearly it is they who need the protection of regulation most. However, regulations are also necessary for the smooth functioning of our economy and a stock market is an essential part of any modern economy. A strong stock market is not just an avenue to raise capital for business ventures, it is also an indication of the solidity of the economy, and thereby of the nation as a whole. Clearly at this stage of our nation's history, we can ill afford to have an unregulated market. It therefore falls upon the authorities here to take concrete steps to put in place regulations for the stock market, in accordance with international business norms and practices. In effect, this means converting the current unofficial market to an official one. Whatever the pain this process this brings in, it must be better than having the undeniable suspense of an unknown quantity deciding on the stability of the economy. We already have a strong banking regulatory system in place. Why then, can we not have one for this? Or are we waiting for another Souk Al Manakh? |
Khalaf A. Al Habtoor
|