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."

 

Horse-trading begins as Tunisia awaits formation of new government

Jihadists flock to fight on ‘unprecedented scale’

UK court says Libyan Abdul-Hakim Belhaj can sue over rendition

Syria accuses Turkey of ‘flagrant violation of sovereignty’

Global campaign to end female genital mutilation kicks off

US to examine troops exposed to chemicals in Iraq

African Union hits back at Somalia rape claims

New scare in Turkey as ‘suspect packages’ found

‘Insults against Netanyahu’ cause embarrassment to US

Kuwait online activist gets four years in jail for insulting judges

Heavy fighting in South Sudan sparks fears of humanitarian catastrophe

Sweden officially recognises State of Palestine

Egypt jails retired general for damaging national security

Israel closes al-Aqsa mosque to worshipers in rare move

Gaza civil servants receive delayed salaries

After US criticism, Israel vows no concessions to Palestinians

Libya internationally recognised PM opens doors of dialogue with rivals

Huthi rebels seize stronghold of Muslim Brotherhood in central Yemen

Will Nidaa Tounes shun Islamists in Tunisia government formation?

Egypt starts work on buffer zone along border with Gaza

Turkey Sultan unveils new palace: Another break with symbols of secular state

Heavy toll as ‘Islamic State’ fights for control of Syria oil field

Iran President suffers fresh setback with rejection of Science Minister

Nuclear deal or no deal: ‘Red lines’ lay bare internal divisions in Iran

Heavy security in Mogadishu as UN chief meets Somalia president

Fighters from Free Syrian Army leave Turkey to join Kobane battle

Israel denies banning Palestinians sharing buses

Kurd fighters leave northern Iraq base for Syria deployment

Jordan requests UN emergency meeting over Israel settler expansion

Jerusalem Mayor visits Al-Aqsa mosque prompting anger

Tunisia reinforces commitment to democracy with ‘transparent’ elections

Turkey ‘decides’ for Kobane future: No Kurds, no Assad... Only Free Syrian Army!

Bahrain suspends Al-Wefaq weeks before parliamentary elections

Huge game changer in Tunisia: ‘In-credible’ failure of Islamist Ennahda Party

Libya PM in Khartoum for talks with Bashir

PKK hijack truck seizing explosive substance

Saudi lawyers get jail time for offensive tweets

Ennahda concedes defeat in Tunisia parliamentary elections

Syria rebels launch assault on regime-held city of Idlib

Iraq peshmerga wait for Turkey stance to depart for Syria

Sisi enacts military trials decree to cover ‘existential threat’

US calls for online war against ‘Islamic State’

Donors pledge $8 billion for Horn of Africa

Acid attacks in Iran: Deputy of Judiciary Chief to lead investigation

Lebanon army enters Islamist stronghold in Tripoli