Gulf shares lower after Saudi slump
Monday, 24 November 2008
KUWAIT CITY, Nov 24 (AFP): Stock markets in the energy-rich Gulf region opened the week lower Sunday a day after the Saudi bourse-the region's largest-slumped more than 9.0 per cent, denting sentiment.
All seven markets dropped with Dubai and Doha shares leading the way.
"I think there is much negative sentiment in the Gulf bourses because of the flurry of (bad) news from the international markets," said Faisal Hasan, head of economic research at Kuwait's Global Investment House.
"There was also a contagion effect from the slump of the Saudi market."
The Saudi bourse is open from Saturday to Wednesday while other Gulf stock exchanges operate from Sunday to Thursday.
The Saudi Tadawul All-Shares Index (TASI), which dived 9.20 per cent on the week's opener Saturday, slid four per cent as Sunday trading opened before reversing course following news of a rate cut.
The TASI was trading down 0.50 per cent at 4,411 points after fluctuating sharply. It was pulled down by the banking sector, which dropped 1.50 per cent. Petrochemicals rose 0.90 per cent.
The market appears to have failed to react fully to the news that the Saudi Arabian Monetary Agency (SAMA) had cut the repurchase (repo) rate, the kindgom's benchmark interest rate, by 1.0 per cent to 3.0 per cent.
SAMA also cut the mandatory reserve for local banks from 10 per cent to 7.0 per cent, freeing huge liquidity for banks to lend.
"This will add more liquidity into the system and it will push up the sentiment in the financial system," Hasan said.
In the United Arab Emirates, the Dubai Financial Market dived 5.0 per cent to dip below the 2,000-point barrier, pulled down by the market leader, property developer Emaar which shed 7.80 per cent.
Emaar stock was trading at 2.73 dirhams (US$0.74), its lowest in well over four years. The stock has shed more that 81 per cent this year. The real estate sector lost 7.80 per cent.
Dubai's sister market, the Abu Dhabi Securities Exchange, dropped 1.0 per cent to just above the 2,800-point mark as the leading real estate sector shed 3.20 per cent.
The two markets apparently ignored news that Amlak Finance and Tamweel, two Dubai-based property finance firms with assets of around $7.0 billion, have begun a merger process.
Shares of the two were suspended on the Dubai market.
The merger will establish a real estate finance bank compliant with Islamic Sharia rules.
The merger news came after reports that the UAE real estate sector has been under pressure because of the credit crunch resulting from the global financial turmoil.
The Kuwait Stock Exchange, the second largest Arab bourse, was trading down 1.20 per cent despite a 1.50 per cent increase by the leading banking sector. KSE finished last week up 2.10 per cent.
Doha Securities Market was trading down 3.70 per cent to a two-year low, while Muscat Securities Market dropped 2.70 per cent. Bahrain Stock Exchange was down 1.20 per cent.
Hasan said the sharp slide in the price of oil, the main source of income for Gulf states, was negatively affecting investor sentiment over fears about its impact on Gulf economies.
All seven markets dropped with Dubai and Doha shares leading the way.
"I think there is much negative sentiment in the Gulf bourses because of the flurry of (bad) news from the international markets," said Faisal Hasan, head of economic research at Kuwait's Global Investment House.
"There was also a contagion effect from the slump of the Saudi market."
The Saudi bourse is open from Saturday to Wednesday while other Gulf stock exchanges operate from Sunday to Thursday.
The Saudi Tadawul All-Shares Index (TASI), which dived 9.20 per cent on the week's opener Saturday, slid four per cent as Sunday trading opened before reversing course following news of a rate cut.
The TASI was trading down 0.50 per cent at 4,411 points after fluctuating sharply. It was pulled down by the banking sector, which dropped 1.50 per cent. Petrochemicals rose 0.90 per cent.
The market appears to have failed to react fully to the news that the Saudi Arabian Monetary Agency (SAMA) had cut the repurchase (repo) rate, the kindgom's benchmark interest rate, by 1.0 per cent to 3.0 per cent.
SAMA also cut the mandatory reserve for local banks from 10 per cent to 7.0 per cent, freeing huge liquidity for banks to lend.
"This will add more liquidity into the system and it will push up the sentiment in the financial system," Hasan said.
In the United Arab Emirates, the Dubai Financial Market dived 5.0 per cent to dip below the 2,000-point barrier, pulled down by the market leader, property developer Emaar which shed 7.80 per cent.
Emaar stock was trading at 2.73 dirhams (US$0.74), its lowest in well over four years. The stock has shed more that 81 per cent this year. The real estate sector lost 7.80 per cent.
Dubai's sister market, the Abu Dhabi Securities Exchange, dropped 1.0 per cent to just above the 2,800-point mark as the leading real estate sector shed 3.20 per cent.
The two markets apparently ignored news that Amlak Finance and Tamweel, two Dubai-based property finance firms with assets of around $7.0 billion, have begun a merger process.
Shares of the two were suspended on the Dubai market.
The merger will establish a real estate finance bank compliant with Islamic Sharia rules.
The merger news came after reports that the UAE real estate sector has been under pressure because of the credit crunch resulting from the global financial turmoil.
The Kuwait Stock Exchange, the second largest Arab bourse, was trading down 1.20 per cent despite a 1.50 per cent increase by the leading banking sector. KSE finished last week up 2.10 per cent.
Doha Securities Market was trading down 3.70 per cent to a two-year low, while Muscat Securities Market dropped 2.70 per cent. Bahrain Stock Exchange was down 1.20 per cent.
Hasan said the sharp slide in the price of oil, the main source of income for Gulf states, was negatively affecting investor sentiment over fears about its impact on Gulf economies.