31/01/2011
Gulf markets tumbled to its lowest levels in few weeks
Turmoil rattles Mideast bourses
The Saudi stock market rebounded Sunday after a 6.43 percent plunge a day before, but investors, nervous about instability gripping Egypt, drove stocks down sharply elsewhere in the Middle East.
The losses, led by a drop of more than 4 percent in the regional business hub Dubai, reflect concerns that the unrest that has roiled the Arab world's most populous country and nearby Tunisia could spread, jeopardizing an economic recovery across the region.
The Tadawul All-Share Index (TASI) surged 2.47 percent or 154.75 points to close at 6,421.97 on Sunday after dropping 430.58 points on the previous day. Over SR4.85 billion worth of shares changed hands Sunday compared to SR6.30 billion on Saturday.
"The jump in the Saudi stock market was not much anticipated but it seems investors saw the sharp and exaggerated fall of 6.4 percent on Saturday as a buying opportunity. Investors had a bit more clarity also about the limited exposure of Saudi listed companies in Egypt. Banks and petrochemicals which matter the most in terms of market cap have very little cross border risk," John Sfakianakis, chief economist at Banque Saudi Fransi, said.
According to The Associated Press, the benchmark index for the Dubai Financial Market tumbled 4.3 percent to close at 1,543.02. Among the biggest losers in Dubai were real estate developer Emaar Properties, the builder of the world's tallest tower, which sank 8.3 percent to 3.11 dirhams (85 cents). Shares of budget airline Air Arabia, which is growing its operations in Egypt, dropped 6.1 percent to 0.79 dirhams (22 cents).
DP World, the global port operator, tumbled 6.2 percent to close at 62 cents on the Nasdaq Dubai exchange. The Dubai World subsidiary is heavily dependent on shipping in the Middle East and Africa, including at the Egyptian Red Sea port of Sokhna, which it manages near the southern entrance to the Suez Canal.
Abu Dhabi's main index sank 3.7 percent to close at 2,561.06. Shares of the exchange's biggest loser, Emirati natural gas producer Dana Gas, plunged 9.9 percent to finish at 0.64 dirhams despite assurances that its Egyptian operations haven't stopped amid the protests.
Egypt's bourse was closed Sunday after its main index fell 16 percent in the final two days of trading last week, the Media Line said in a report.
"There's this contagion effect, where investors are thinking: Well, is this going to spread out across the Arab world?” Haissam Arabi, chief executive of Gulfmena Alternative Investments, a fund management firm in Dubai, told AP.
Kuwait shares dropped 1.8 percent to close at 6,822. Qatar's benchmark index slumped 3 percent to 8,709.77.
The Egyptian situation remains unclear, which will continue to test investor confidence while it lasts. But the support it offers to the oil price will benefit some sectors, especially if a clear deterioration in the situation can be avoided, he added.
According to the Media Line, nervousness over Egypt wasn't confined to the Middle East. On Friday, stocks worldwide plunged the most since November, with the MSCI World Index, a barometer of global stock markets, declining 1.4 percent.
As crude oil posted its biggest jump since 2009, Canaccord Genuity said in an investor note that 1.8 million barrels of oil per day were transported through Egypt's Suez Canal in 2009. If the canal were to be closed for an extended period, the Canadian brokerage house said, it would add 6,000 extra miles of travel costs to bring oil from the Gulf to Europe and the US, raising the cost of oil.
