RIYADH, 4 June 2006 — These are great times for the Gulf economy. Spiraling oil prices, the new construction boom and ever expanding business activities have been making headlines in recent months. The region is blessed with precious natural resources, oil and gas in particular, and therefore the residents are untouched by the negative consequences of ever-rising prices of petroleum products — a major bone of contention for those living in the rest of the world. Unlike those in the East or the West, Gulf residents do not have to pay through their nose for their day-to-day energy requirement — be it electricity or transport.
However, the one distinctly unhappy segment is equity investors. Their big dreams of making a fortune through stock market investment have crashed, just like the region’s stock market itself.
Despite the plethora of “experts” who go astray quite often, what is worrying investors is whether to hold on to their equities or mutual fund investments. “I believe in the region’s plush oil rich economy which is growing strong thanks to the zooming oil prices. I will not panic as the region’s economic fundamentals are sound,” says a confident investor.
However, one comes across sad and weird stories, with every passing day. The stock market crash is talk of the region as many young and ambitious men have lost their precious earnings. In private, it is said that sympathizers have made appeals to help those - who lost money — on humanitarian grounds!
Although the slide in general has been attributed to large-scale weaknesses seen in all bourses worldwide, investors in general remain concerned. The conservative estimates say that the recent fall in the Gulf’s capital market affected at least 10 million investors. The effect is so far reaching that in a region where young men must stash hefty dowry to the bride’s family, if they want to get out of their bachelorhood, marriages are canceled at alarming rate. It is well known fact that a wedding is costly affair in most of the Gulf countries as brides have to be given the financial security. Men are forced to postpone their marriages “for the time being” as they would not be able to spend the money needed for marriages. There are others who have canceled their yearly summer family vacations which they are so used to especially to the cooler chimes in Europe. The housing dreams of many have gone bust. All these losers have one thing in common — they are not sure of how much time it would take to “re-earn” what they lost.
The stock sentiments remain fragile because the markets rose sharply and then fell consistently. The Dubai financial market, for example has been the worst hit, followed by Saudi Arabia and Abu Dhabi. One estimate points out that the investors in the UAE alone lost over 50 percent since October last year. In Kuwait, the possibility of income-tax getting levied for the first time in its history has made the matters more complex. In such a situation, for a common man in the Gulf, who has lost the money on bourses, life has only become tougher.
Fortunately, the reduction of petrol prices to the extent of 30 percent in Saudi Arabia has given some relief to the man on the street.
So what’s the message? Some suggest - in lighter vein — that the investors should go by the new stock market dictum in the Gulf which says it is time to exit, the moment your would-be mother-in-law enters the stock market and get married before she loses her money and raises the bride’s price!