Global Arab Network | Unrest in Arab World Costs Saudi Market $ 54 Billion

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Unrest in Arab World Costs Saudi Market $ 54 Billion

Global Arab Network - - Adnan Kassar

Sunday, 06 March 2011 16:54

Saudi Arabia’s stock market has plunged by nearly $54 billion since the end of January as investors remain under the grip of fear that the current turbulence in the region could spill into the world’s oil superpower, Global Arab Network reports according to Emirates 24/7 website.

The slump in Tadawul, the largest and busiest bourse in the Middle East, dragged down other major markets in the region, mainly those of Dubai, Kuwait and Qatar to offset large gains they had made in previous weeks.

Statements by Saudi Arabia’s Finance Minister Ibrahim al-Assaf that the Gulf Kingdom’s economy is strong and that he himself had bought shares gave a strong push to Tadawul on Saturday, lifting it by a whopping seven per cent.

But the rise is way below the losses suffered by the bourse since the end of January due to weakening confidence among investors despite expectations by some local institutions that unrest would not spread to Saudi Arabia.

From around $340 billion at the end of January, Tadawul’s market capitalization plummetted to $286 billion on March 2, a fall of about $54 billion in nearly 30 days, or an average loss of more than $two billion per working day.

Analysts said the sharp fall in the Saudi bourse and slumps in other regional markets was not because of unrest in Libya and recent events in Egypt, Yemen and Tunisia but due to fears of what could happen later.

“Regional unrest is increasing investor concerns…. large scale instability in North Africa and protests in neighbouring countries (Bahrain, Oman, Yemen) have culminated in a significant 12 per cent market sell-off in Tadawul over the past three days (early this week) as investors are growing increasingly concerned that protests and subsequent instability could ultimately reach the Saudi market,” the Saudi investor firm NCB Capital said in a study.

But the report added that it believes there is exaggeration in market fears on the grounds that unrest is unlikely to reach Saudi Arabia despite recent reports of calls for demonstrations in the Kingdom.

Figures by the Abu Dhabi-based Arab Monetary Fund (AMF), which tracks regional stock exchanges, showed the value of shares traded in Saudi Arabia also dipped to nearly $17.2 billion through February from $22.3 billion in January.

The decline in Saudi market capitalization allied with a drop in other regional bourse to depress the total Arab market capitalization by nearly $90 billion to around $865 billion on March 2 from $964.8 billion at the end of January.

The figures showed Qatar, which had demonstrated strong performance in previous months, slumped by around $14 billion from $120.4 billion to $106.6 billion in the same period. Kuwait dipped by nearly $16 billion to $108.7 billion from $124.2 billion following marked gains before the year end.

Dubai lost nearly $2.7 billion to end Wednesday’s trading at $50.3 billion compared with $53 billion at the end of January.

Abu Dhabi edged up slightly to around $68.1 billion from $$67.8 billion after massive losses early last month while Oman shrank by nearly $1.5 billion. Despite recent unrest in Bahrain, Manama’s security market remained almost unchanged, ending Wednesday at around $20 billion.

Egypt, where trading has been crippled by internal turmoil, stayed at about $71.4 billion while Morocco’s Casablanca bourse, one of the largest Arab markets, gained around $1.3 billion to reach $69.8 billion on March 2.

There were also slight falls in Jordan, Lebanon, Syria and Palestine while Tunisia’s bourse lost about $900 million. (emirates247)

Global Arab Network

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