01/02/2011
Middle East markets see turbulence as investors eye Egypt
Trading volumes declined further, but remain above the January average
Saudi currency forwards surge to two-year high on Egypt unrest
Middle East markets ended mixed on Monday, with Dubai and Saudi stocks among decliners as the unrest convulsing Egypt spurred renewed selling in volatile trade.
Saudi currency forwards climbed Monday to their highest level since the global crisis hit the Gulf region two years ago as investors hedged their exposure to Egypt, where protests to topple its president entered their seventh day.
Saudi Arabia's bourse, the largest in the Arab world, gave back early gains as the index fell 1 percent, taking its losses to 5.1 percent this week as firm oil prices did little to bolster sentiment in the world's top crude exporter..Trading on other stock markets has also been volatile.
Egypt’s bourse will be closed for a fifth day Tuesday, but Middle East markets have tumbled this week, with Saudi Arabia, Dubai, Abu Dhabi, Oman and Qatar all seeing their largest daily declines in at over eight months. While some stocks have since trimmed losses, more volatility is forecast.
Gulf Arab oil-exporting countries have avoided violent unrest spreading through a poorer part of the Arab world helped by generous welfare systems.
However, fears of Egypt contagion have put their markets under pressure.
“There is contagion rippling through the Arab world, a lot of risk aversion and some selling pressure travelling from Egypt to the GCC [Gulf Co-operation Council],” Benoit Anne, head of emerging market strategy at Societe Generale in London, said.
The political situation in Kuwait and the rest of Gulf, is quite different to that in Egypt," he said. "Egypt is a republic yet Mubarak has been acting like a ruling family for 30 years, whereas in the Gulf the royal families will continue to govern and we accept that."
Trading volumes were lower Monday than a day earlier, but remained above the January average.
