DUBAI, 17 August 2007 — Major stock markets in the Gulf region have largely shrugged off the turbulence which has seen many world bourses go into meltdown over the US housing market crisis, analysts said yesterday.
The largest Arab bourse in regional powerhouse Saudi Arabia posted a healthy gain over the week, although markets took a hit in the bustling emirate of Dubai and in Egypt — the Arab world’s most populous nation.
Saudi Arabia’s Tadawul All-Shares Index closed the week on Wednesday at 7,900.88 points, up 2.4 percent on its opening level on Saturday, after hitting a high on Monday of 7,945.94 points.
So far the Gulf markets have proved resilient in the face of global market jitters over a downturn in the US housing market and the exposure of banks to bad loans.
This is despite a fall in oil prices as investors fear US energy demand could be hit if the financial turmoil starts to curb growth in the world’s biggest economy.
In Asian trade yesterday, New York’s main contract, light sweet crude for September delivery, dropped 66 cents to $72.67 while Brent North Sea crude for September delivery dropped 94 cents to $70.70.
“The global turbulence was instigated by a problem related to mortgages in the United States. Here in Saudi Arabia we don’t have such issues,” Riyadh-based financial consultant Hisham Abu Jamea told AFP.
“Liquidity (in the Saudi market) is currently at a record high level.” Abu Jamea pointed out that the Saudi market is not open to foreign investors, except those who are resident in the kingdom, which limits the impact of any liquidation of assets by nervous foreign investors.
The Kuwait stock exchange, the second largest in the Arab world, also closed Wednesday at 12,520.1 points, up 0.31 percent from Saturday’s opening at 12,481.
Kuwaiti financial analyst Ali Al-Eneizi similarly downplayed the connection between the performance of Gulf stocks and global markets.
“The prices of our companies are influenced mainly by their financial statements,” and not by fluctuations in world markets, he told AFP.
He suggested that such an international downturn could have a “positive impact on the emerging markets of the region, because they trigger a return of capital.” But in neighboring Dubai, which is vying to establish itself as a regional business hub, the stock market felt the impact of the global rout, closing down 0.87 percent down on Wednesday, and continuing its slide yesterday.
“We have noticed that some foreign funds have started selling,” the funds manager at the National Bank of Dubai, Fadi Al-Saeed, told Al-Arabiya television.
“There is a slight liquidation taking place to reduce (foreign investors’) exposure,” he said.
Dubai’s index was at 4,190.40 points in yesterday afternoon dealings, 1.68 percent off its opening at 4,262.07.
The biggest losses were registered in Cairo, where the bourse sank four percent last week, proving to be more vulnerable than Gulf markets to global turmoil because of the large presence of international investors. Yesterday, the CASE-30 index of the Cairo and Alexandria Stock Exchange was down 3.42 percent in late trading at 7,797.26.
Smaller Gulf markets also dropped. Abu Dhabi lost 1.22 percent and Doha 1.45 percent while Oman was trading 0.42 percent lower and Bahrain shed 0.05 percent.