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."

 

IS bid to seize Kobane stalls amid air strikes

Six Tunisians killed in police-gunmen standoff

Iraq MPs divide over Kurds deployment to aid Kobane

Suspicious envelopes to consulates in Istanbul prompt alert

Morocco fossils: A rare and vanishing treasure

Germany offers to help Armenia forge peace with Turkey

Libya wakes up from ‘Dubai dream’ to face Somalia-like ‘failed state’

South Yemen separatists vow to intensify secession protests

Relatives of Iraq massacre victims: Blackwater guards should be killed

Ghannouchi makes it clear to Tunisia: It’s either political Islam or Daesh!

Deadly clashes erupt after army raid in northern Lebanon

200 Iraqi Kurd fighters to travel through Turkey to Kobane

Coalition strikes in Syria eliminate more than 500 jihadists in one month

Ahead of elections, new clashes remind Tunisia of need to fight terror

Saudi Arabia jails mothers for preparing sons to wage jihad

Jury finds Blackwater guards guilty of 2007 'massacre' in Iraq

Iraq Kurds approve reinforcements for Kobane

Israel classifies car crash as ‘hit and run terror attack’

Turkish woman arrested for stepping on Koran

Erdogan criticises US for airdrops on Kobane

Iraq schools provide shelter but late to open for classes

Syria air force shoots down two of three 'IS warplanes'

Egypt court rules on ‘Nasr City terror cell’

Fire from Egypt wounds two Israeli soldiers near border

By hook or by crook, settlers notch up property gains in East Jerusalem

Turkey envoy meets leader of parallel government in Libya

Israel arrests seven Palestinian fishermen off northern Gaza

Khamenei to Abadi: Iraq can beat 'Islamic State' without foreign troops

Saudi special court rules in cases of riots and terrorism

Libya army scores small victory in Benghazi

Only in Libya: Government calls for civil disobedience

Kasserine reaps bitter harvest from Tunisia revolution: Poverty and terrorism

Iraq Kurds set to vote on deployment of Peshmerga forces to Syria

Islamic State ‘share in US weapons’ embarrasses Pentagon

Alderton: Morocco unrivalled business gateway to sub-Saharan Africa

Protests over IS turn Istanbul University into war zone

Turkey eyes stricter punishment against lawbreakers at protests

For Sudan President: Promises are something and re-election is something else

Iran returns Abadi to ‘house of obedience’

From traditional military to counterinsurgency force: Syria army grows more capable

South Sudan rivals accept 'responsibility' for civil war

British drones in Iraq also used for Syria surveillance

Turkey launches new wave of wire-tapping arrests

Rise of Shiite militias challenges government authority in Iraq

Syria Kurds show impressive resistance to ‘Islamic State’ in Kobane