First Published: 2006-03-14

 
Black Tuesday: Mideast stock markets nosedive
 

Value of Gulf bourses drops Tuesday to just under one trillion dollars after solid five-year upward run.

 

Middle East Online

By Omar Hasan - KUWAIT CITY

A dark day

Stock markets in the oil-rich Gulf region and Egypt suffered major losses Tuesday, heralding what some analysts said was a crash after a solid five-year upward run and triggering angry demonstrations in Kuwait.

The market in OPEC kingpin Saudi Arabia, the largest in the Arab world, dropped sharply for the fourth consecutive day, reflecting what analysts said was a sharp correction across the region.

The value of Gulf bourses dropped Tuesday to just under one trillion dollars, down some 150 billion dollars from their 2005 value and more than 250 billion dollars below the peak.

The Saudi Tadawul All-Shares Index (TASI) shed 4.82 percent to end the morning trading session below the 15,000-point psychological barrier for the first time this year at 14,887.74 points.

The TASI has so far lost 10.92 percent since the start of the year and a whooping 27.9 percent from its all-time high of 20,634.86 points reached on February 25. It has shed 17 percent during the past four days.

"I think we are now at a serious turning point... It is certainly the beginning of a crash though the market is expected to resist at 12,200 points," said Ali Dakkak, professor of economics at Jeddah-based King AbdulAziz University.

"We need swift actions and decisions to restore confidence to investors," a majority of whom are speculators who have been lured into the market by sharp price increases and handsome profits, Dakkak said.

But Kuwaiti financial analyst Ali al-Nimesh characterised the fall as a "long-term correction" rather than a crash.

"It's still early to call it a crash. The indices are expected to rebound slightly sometime soon, but this appears to be a long-term correction cycle. It may continue for two years," Nimesh said.

He said he expected the Saudi market to lose between 50 percent and 60 percent of its peak before rebounding.

In Kuwait, investors staged a protest outside parliament, urging MPs to intervene after the market registered its biggest single-day loss and closed at a six-month low.

"We want a complete probe into what has happened in the market since last Wednesday," when the index began to slide, demanded one investor. "Is our government weaker than those pirates."

The Kuwait Stock Exchange Index finished down 3.7 percent or 382.90 points at 10,057.50 points, its lowest close since September 14. It is now 12.1 percent below its 2005 close and down 16.6 percent from its all-time high of 12,054.70 set February 7.

The Kuwait Investment Authority, the state investment arm, promised to inject cash into the market on Wednesday following a protest by hundreds of small investors after the index dropped 257.8 points.

But investors insist that no government money has reached the market.

In the United Arab Emirates, the Dubai Financial Market Index shed 81.18 points or 11.7 percent to close at 611.86 points. It has so far dropped 40 percent from its end-2005 close and down 57 percent from its all-time high.

Abu Dhabi Securities Market ended at 4,021.26 points, down 4.44 percent. The index is now 22.7 percent below the 2005 close.

In Egypt, the Cairo stock market dropped 11.3 percent in early afternoon trade, its biggest single-day drop in five years. The index was at 5,589 points compared with the close Monday of 6,296.

The Doha Securities Market closed down 3.3 percent at 9,282.42 points. It is 16 percent below last year's close of 11,053.24 points and down 25 percent on its all-time high of 12,400 points recorded late last year.

Bahrain's stock market also closed at 2,131.23 points, down 1.84 percent.

Dakkak attributed the regional loss to action by Saudi dealers, who invest heavily in all Gulf stock markets, and have recently pulled out to cover losses back home.

"It is a chain reaction. Saudi investors have withdrawn much of their money from stock markets in the Middle East, including Egypt and Jordan, causing them to decline."

Gulf markets have increased six to seven fold since 2001 due to abundant liquidity generated from a sharp rise in oil revenues. The upward trend and lucrative profits lured millions of small investors including women.

"Almost 60 percent of Saudi investors are small dealers. They depend mainly on speculation and whenever a decline happens they try to exit, causing the market to slide," Saudi economist AbdulAziz al-Daghestani said.

"Recently it became like gambling and not investment in most Gulf markets. That's why we are seeing the fast fall."

 

Separate Syria air strikes kill at least 32

Turkish FM in Switzerland amid rising tensions with Europe

Two more 'significant arrests' over London attack

UN says Israel has ignored resolution on illegal settlements

Cities, monuments dim lights for Earth Hour

Gunmen kill Hamas official in Gaza

Veteran politician says Turkey referendum a 'test' for Kurds

More Algerian women in work, but husbands control wages

Beirut university settles US lawsuit over Hezbollah

1.1 million weekend travellers from Dubai hit by laptop ban

Shiite Lebanese women endure painful custody battles

Russia, China seek Iraq chemical weapons probe

Besieged Syrians struggle with dwindling dialysis supplies

Syria army retakes Damascus areas from rebels

Syria says peace talks must first focus on 'terrorism'

12 Syrian refugees dead after boat sinks off Turkey coast

Mosul displaced head into unknown

As war keeps them away, Yemen children dream of school

Ousted Egyptian president Mubarak freed from detention

Iraq's Sadr threatens boycott if election law unchanged

Israel, US fail to reach settlement agreement

Yemen rebel missile kills Saudi soldier

Britain arrests eight as IS claims Westminster attack

Man attempts to drive into crowd of shoppers in Belgiumís Antwerp

Palestinian FA chief says ball in Israel's court

Israel arrests Jewish teen over anti-Semitic terror threats

An Egypt court is to reopen a corruption probe into Mubarak

Bahrain frees award-winning AFP photographer

Erdogan slams 'pressure' on Turks in Bulgaria ahead of vote

Israel policeman suspended after caught on video beating Palestinian

Turkey summons Russia envoy over soldier death in Syria

Bahrain sentences three to death for police bombings

UN-backed Syria talks restart in Geneva

EU summons Turkey envoy over 'safety' remarks

400,000 'trapped' in west Mosul's Old City

Saudi film festival launch postponed after sandstorm

10 Egyptian soldiers killed in Sinai roadside bombings

Qaeda, IS developing harder-to-detect bombs say experts

World leaders condemn Britain terror attack

Terrorist attack at Londonís Houses of Parliament

2016 saw sharp rise in illegal Israeli settlement projects

US-led coalition vows lasting victory against IS

Bahrain arrests photographer on unspecified charges

Humanitarian groups demand access to Yemen civilians suffering 'open-air massacre'

33 killed in US-led air strike on north Syria