JEDDAH/RIYADH, 14 September — Local economists have predicted that Saudi investors in the United States will lose $28 billion as a result of the destruction of the World Trade Center in New York and the subsequent closure of the financial market.
They said all international investment funds will be affected by Tuesday’s US attacks and advised local investors who have stakes in global stocks to keep away from speculating until the middle of next week.
Saudi investors, whose foreign assets are estimated at $600 billion, are expected to suffer losses due to the general losses in world financial markets.
“The main losses will be in the mutual funds and the insurance sector,” the economists told Arab News.
“Insurance companies have incurred the biggest loss. The value of Saudi investments in joint funds between local and foreign banks is estimated at $35 billion,” said Saeed Al-Sheikh, chief economist of the National Commercial Bank.
Kuwaiti economist Hajjaj Bukhdour said he expected the emirate’s $150 billion private and government overseas investments to be reduced by at least six percent.
“We assume the loss of Kuwaiti assets abroad, whether government or private, to be at least six percent,” he remarked.
But prominent Kuwaiti businessman Faisal Al-Mutawa said it was too early to gauge Kuwait’s economic reaction to the attacks in New York and Washington.
“Once the US has retaliated, and retaliated properly, asset values will go up again,” said Mutawa, who is on the board of the Kuwait Chamber of Commerce and Industry.
Monetary officials in some Gulf states stressed that local currencies had not been affected by the attacks.
Saudi Deputy Finance Minister Jabara Al-Seraisry confirmed that the riyal, pegged against a basket of currencies, mainly the dollar, had not been affected.
Saudi stocks, meanwhile, fell 4.3 percent in the week to Thursday, affected by the shake-up on global markets following Tuesday’s attacks on US installations.
The all-share index, published by Bakheet Financial Advisors (BFA), closed at 2,472.56, down from 2,582.52 the previous week and from an all-time high of 2,605.04 two weeks ago.
Traders said the index, which had been climbing throughout the year on the back of strong oil prices, fell 3.5 percent on Tuesday as local investors off-loaded shares following news of the attack.
The heavyweight banking sector dominated trading and was hit hardest, with blue-chips Riyadh Bank and Al Bank Al Saudi Al Fransi down 6.7 percent and 6.4 percent respectively.
Riyadh Bank, the week’s second most active share with 11.4 percent of trade value, ended at 224.75 riyals ($59.92) compared with a year high of 248.75 riyals and low of 175.75 riyals.
Al Saudi Al Fransi closed at 324 riyals compared with a year high of 360 riyals and a year low of 232 riyals. There were no gainers among blue-chip stocks.
“The Saudi stock market dropped significantly over the last few days in harmony with the global stock market decline following the unfortunate events that took place in the United states,” BFA said in a report.
“There was a shock in investor confidence,” Saeed Al-Sheikh of NCB said. “What happened was not based on fundamentals as the Saudi market is too far away to be effected.” Sheikh said he expected Saudi investors to turn their focus to local stocks.
Saudi American Bank, the most active stock with 25.5 percent of trade value, fell 2.1 percent to 429.5 riyals. Decliners outnumbered advancers 57-3 during the week, while four shares were unchanged and 12 were not traded.