The current situation in the Saudi stock market has left a lot of puzzled people. In a country where the economy is outwardly vibrant, where the budget abounds in surpluses, and where citizens are demonstrating visible confidence and support for their leader and his policies, this downward trend in the market has led to the birth of a number of theories among the players.
This is an ongoing topic among the rank and file, as new words are being introduced in our daily conversations. “Hamoors” or sharks, “red or black?” are among words you would pick up in any conversation. Admittedly, many have been burned by the performance of the market in the past two months, some perhaps with catastrophic financial results.
And as is with any major event, there are bound to be a host of experts with an explanation for the unspoken reasons behind such calamities. In this case, with a continued sliding performance recently following an unprecedented boom in share value, some tout their views with such authority that one would assume they had an inside track to the market and little else.
Ahmed, one of those market traders offers his theory behind the market collapse. “Look. A big Hamoor who held millions and millions of shares died recently. His heirs were soon fighting among themselves for the spoils, each intent on taking up his own business venture independently. The majority of the dead man’s wealth was in real estate and stocks. After various consultations with the family elders, it was decided that it would be best if the deceased man’s holdings were liquefied and the heirs divided the cash.”
“Soon the selling started, slowly at first, but gathering momentum as the heirs were getting impatient and eager to get their hands on the money. This massive selling was not discreet enough to be unnoticed and savvy investors started following. And once market confidence slipped, herd mentality took over and there was a rush to sell, and this has led us to the present situation. And that, Tariq, is a qualified opinion on the subject.”
I was tempted to tell him that I doubted that even someone with the wealth of Bill Gates would have such a significant impact on the market, but decided to leave him with his delusions. Marko, a Greek, offers another explanation. “It all began when they announced that we expatriates could buy into the local market. This was nothing more than a scheme to get to our funds. Buoyed by a booming market, we expatriates fell in like suckers and bought shares like hot cakes. Who wouldn’t have wanted to get a piece of the pie, especially if your slice was getting bigger day by day.”
“And once our money was safely in their hands, the market reverted. As a result, most of us expats were left holding the bag along with a few Saudi investors. Now the controlling body can sit back and pat itself on the back for arresting this outflow of capital that was an object of their concern. There, I’ve finally got it off my chest. And I am upset. Why I didn’t get out when my slice got big enough? Human nature I suppose.”
Marko just didn’t seem to understand that losses were felt across the board, and across all nationalities. Statistics indicate that Saudi investment topped 98 percent of the market, and thus losses weren’t limited just to the expats who had ventured into this field.
Ali has a different theory. “It’s all about Iran, my man. The ongoing tensions surrounding Iran’s nuclear ambitions fueled by that Texas cowboy’s lunacy has left a lot of investors worried. Any military strike ordered by the cowboy is sure to result in Iran fighting back. They would release their armaments everywhere, striking America and their allies with vengeance. The fall-out alone in the region would render our shares worthless.”
“As a result, people are divesting themselves of paper they consider would be useless in the event of a conflict, and buying gold. Even real estate has lost its luster. Have you kept up with the price of gold in the market? It’s over $700 an ounce and rising. Now why do you suppose that is?”
More theories abound and many more amusing ones will be forthcoming. And we sympathize with those who have lost their wealth.
But for those with money on hand and can do without it for some time, now is an ideal time to gobble up the stocks at dirt-cheap value. That seems to be the voice of reason from the trading floor.
