The losses, led by a drop of more than 4 percent in the
regional business hub Dubai, reflect concerns that the unrest that has roiled
the Arab world's most populous country and nearby Tunisia could spread, jeopardizing
an economic recovery across the region.
The Tadawul All-Share Index (TASI) surged 2.47 percent or
154.75 points to close at 6,421.97 on Sunday after dropping 430.58 points on
the previous day. Over SR4.85 billion worth of shares changed hands Sunday
compared to SR6.30 billion on Saturday.
"The jump in the Saudi stock market was not much
anticipated but it seems investors saw the sharp and exaggerated fall of 6.4
percent on Saturday as a buying opportunity. Investors had a bit more clarity
also about the limited exposure of Saudi listed companies in Egypt. Banks and
petrochemicals which matter the most in terms of market cap have very little
cross border risk," John Sfakianakis, chief economist at Banque Saudi
Fransi, said.
According to The Associated Press, the benchmark index for
the Dubai Financial Market tumbled 4.3 percent to close at 1,543.02. Among the
biggest losers in Dubai were real estate developer Emaar Properties, the
builder of the world's tallest tower, which sank 8.3 percent to 3.11 dirhams
(85 cents). Shares of budget airline Air Arabia, which is growing its
operations in Egypt, dropped 6.1 percent to 0.79 dirhams (22 cents).
DP World, the global port operator, tumbled 6.2 percent to
close at 62 cents on the Nasdaq Dubai exchange. The Dubai World subsidiary is
heavily dependent on shipping in the Middle East and Africa, including at the
Egyptian Red Sea port of Sokhna, which it manages near the southern entrance to
the Suez Canal.
Abu Dhabi's main index sank 3.7 percent to close at 2,561.06.
Shares of the exchange's biggest loser, Emirati natural gas producer Dana Gas,
plunged 9.9 percent to finish at 0.64 dirhams despite assurances that its
Egyptian operations haven't stopped amid the protests.
Egypt's bourse was closed Sunday after its main index fell
16 percent in the final two days of trading last week, the Media Line said in a
report.
But Yazan Abdeen, a portfolio manager for ING Barings in
Dubai, told The Media Line that investor concerns were unfounded and that there
were already signs on Sunday that the initial panic had subsided.
"The underlying economic drivers vary greatly between
countries. That's why you started to see Saudi pushing back and reclaiming
yesterday's (Saturday's) losses,"
Abdeen said. "People who don't know the region very
well worry there will be a contagion effect from Egypt to the Gulf Cooperation
Council countries. But the ideology driving demonstrations in Egypt is related
to poverty and unemployment. You can't say that about the Gulf."
"There's this contagion effect, where investors are
thinking: Well, is this going to spread out across the Arab world?” Haissam
Arabi, chief executive of Gulfmena Alternative Investments, a fund management
firm in Dubai, told AP.
Kuwait shares dropped 1.8 percent to close at 6,822. Qatar's
benchmark index slumped 3 percent to 8,709.77.
Shares in the Jordanian capital Amman also fell, including
the blue chip Arab Bank, which is based in Jordan and has branches in nearby
Egypt. It fell 3.6 percent to 9.45 dinars ($13.34), outpacing the broader
market decline of 2.3 percent.
A broker at the Amman Stock Exchange told the AP the slide
is "linked to the unrest in Egypt." "It's natural that investors
will be frightened by such events," he said, insisting on anonymity.
Sfakianakis said: "Regional markets were expected to
fall given that it was the first day of the week. From here on, we need to wait
and see the level of uncertainty in the Egyptian political scene and how
international markets react."
According to professor Mohamed A. Ramady of KFUPM, the fall
in other Gulf countries was to be expected until the full picture from Egypt
clears. "The more the situation drags on and uncertainty grips the
markets, the more volatility is to be expected in the Gulf. However, as the
small rally in the Saudi market on Sunday illustrates, there are some good
pickings to be made by savvy investors who can differentiate between different
country sovereign risk, and Saudi risk is still low compared to other
countries,” he added.
"It is important to bear in mind that what we saw in
Saudi Arabia on Saturday and in other parts of the region on Sunday was really
the initial reaction to a new environment characterized by far greater
uncertainty than had prevailed when the markets closed last week. Essentially,
investors have had to re-evaluate their assumptions about the market conditions
and the new pricing naturally reflects the greater stress that now
obtains," Jarmo T. Kotilaine, chief economist at the National Commercial
Bank, told Arab News.
The Egyptian situation remains unclear, which will continue
to test investor confidence while it lasts. But the support it offers to the
oil price will benefit some sectors, especially if a clear deterioration in the
situation can be avoided, he added.
"Interestingly, as we look at market movements during
the day(s), we see an almost immediate re-pricing to a new risk benchmark
followed by fairly normal market dynamic in the new, lower range,"
Kotilaine said.
According to the Media Line, nervousness over Egypt wasn't
confined to the Middle East. On Friday, stocks worldwide plunged the most since
November, with the MSCI World Index, a barometer of global stock markets,
declining 1.4 percent.
As crude oil posted its biggest jump since 2009, Canaccord
Genuity said in an investor note that 1.8 million barrels of oil per day were
transported through Egypt's Suez Canal in 2009. If the canal were to be closed
for an extended period, the Canadian brokerage house said, it would add 6,000
extra miles of travel costs to bring oil from the Gulf to Europe and the US,
raising the cost of oil.
