JEDDAH/KUWAIT CITY: Arab shares tumbled for the fourth day running yesterday but the Saudi bourse, the region’s largest, rebounded after the assurances by the Saudi Arabian Monetary Agency (SAMA) Deputy Gov. Mohammad Al-Jasser that Riyadh faces no liquidity problems and is not exposed to the global financial crisis.

Concerns mounted about the impact of the global financial crisis in the Gulf region’s seven stock markets, which lost more than $30 billion of capitalization in the latest rout. That brought their value down to around $770 billion, a loss this week of around $180 billion. Most regional markets closed before the announcement by the world’s major central banks of coordinated interest rate cuts.

However, stocks in Saudi Arabia, which were still trading when the cuts were announced, rebounded strongly as investors looked for a similar cut by SAMA.

After slumping below 6,000 points for the first time in more than 52 months and shedding more than eight percent, the Tadawul All-Share Index (TASI) closed just 1.5 percent down at 6,160.52 points. For the week as a whole, the TASI plummeted 17.4 percent since the market reopened on Monday after the Eid Al-Fitr holiday.

Al-Jasser said: “I think the infection at the international markets may have affected our market.”

Al-Jasser said in comments carried by the SPA news agency that the international financial crisis will not have a great impact on the Saudi economy or on the Saudi financial institutions due to the fact that there are no direct investments in these international institutions that have witnessed strong problems in liquidity and investment. He noted that the Saudi economy has never witnessed problems in liquidity, adding that growth within the last eight months rose by 21 percent compared to 18 percent last year. Moreover, he said deposits grew by more than 22 percent in the first eight months compared to the same period last year.

In a statement to Channel 1 on Tuesday night, Al-Jasser said there is plenty of liquidity in the Saudi economy which has led to this growth and increase of lending process in the local market.

SAMA has the capability and means for dealing with any certain circumstance in liquidity, he said. He pointed out that SAMA has been continuously and accurately following up the developments at the market, and it is ready to make adequate liquidity available if the market requires that.

He said all these means are available for the banks to obtain liquidity, and “We have the mechanism” for repurchasing of liquidity not used by the banks. “We are not facing any problem as regards liquidity in the Saudi economy”, he added.

Al-Jasser reiterated that the deposits at the Saudi banks are in a secured situation adding that the Saudi banks and their financial base and loans exist in the Saudi economy. He noted that the rate of loans has amounted to 116 percent of the volume of deposits in the Saudi economy and added nothing can justify becoming afraid from the impact of the international financial crises on the deposits. He made it clear that SAMA will not allow endangering the deposits at the Saudi banks.

The Saudi stock market turnover was SR7.06 billion yesterday compared to SR5.24 billion on Tuesday.

In the booming Gulf emirate of Dubai, shares have lost a quarter of their worth since the trading week began on Sunday. The Dubai Financial Market sank another 8.43 percent to 3,085.02 points at close. Giant real estate developer Emaar shed 7.4 percent while leading construction firm Arabtec dipped the maximum 15 percent.

The Kuwait Stock Exchange, the second largest in the Arab world, closed down 1.4 percent at 11,472.00, recovering from bigger losses after the central bank cut the benchmark lending rate by 1.25 percentage points to 4.5 percent.

The Doha Securities Market Index finished down 8.77 percent at 7,432.87 points, the biggest single-day decline in Qatar’s financial market in several years. It shed 20 percent this week.

The Abu Dhabi Securities Exchange, the other bourse in the United Arab Emirates, shed 6.43 percent to close on 3,176.94 points.

The Muscat Securities Market slumped 7.2 percent at close and was below the 7,000-point mark for the first time in more than two years. The Beirut Stock Exchange appeared to be less severely affected, with the index closing just 1.12 percent lower. Egypt’s stock market also clawed back more than half of its losses to close 7.1 percent lower. The CASE-30 index, which had registered an intra-session decline of 13.4 percent, ended the day at 5,479 points. The index had lost 16.47 percent on Tuesday.

The CASE-30 has lost more than half its value in six months after almost doubling its level over the past four years to a high of 12,000 points in May.

Meanwhile, Kuwait slashed its key discount interest rate by 125 basis points yesterday while the United Arab Emirates cut by a more modest amount, tracking a round of emergency rate cuts by major central banks.

The Kuwait cut added to central bank offers of funds to local lenders in recent days. The only Gulf Arab state to delink its currency from the dollar, Kuwait cut the benchmark discount rate to 4.5 percent from 5.75 percent and the repo rate to 2.5 percent from 3.5 percent.

The UAE Central Bank has lowered the lending rate to banks from 5 percent to 3 percent. It also slashed the rate on its Repurchase of Certificate of Deposit (REPO) from 2 percent to 1.5 percent with effect from yesterday.

— With input from K.T. Abdurabb and agencies