Tuesday, March 21, 2006

Daily Stock Report (and Stock Report Report)

The morning newspaper had a very small item on yesterday's very small decline. It stated that the government would, in fact, intervene to stop a stock market crash, but did not bother to intervene on something as trivial as yesterday's 0.7% decline.

Today the Dubai stock market was up 1%. Note that, of the 39 stocks on the Dubai Financial Exchange, only 20 are actually traded, and most of the shares can only be bought or sold by Citizens, though a few are available to ex-pats. Daily, 297 million euros are traded, which may seem like a lot, but every day, the UAE pumps about half that much in oil, all of which is cash flowing into the UAE, while the stock market is just cash being shuffled around inside the UAE.

A local column on stocks explained that most stocks (especially here, where many shares are restricted) are never traded, that the traded shares are just like the froth on top of a cup of cappuccino, and don't really amount to anything. A sentiment which wasn't heard when the froth was getting bigger, but which is being spread now that the froth is dying away leaving: (Choose one) a) an empty cup; or b) a cup full of the real wealth; or c) some wealthy sheikhs and some poor relations (and ex-pats); d) all of the above; e) none of the above.

But maybe it's just an attempt to align with the World Health Organization (WHO) and the International Monetary Fund (IMF) and reduce the birth rate?

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