Middle East shares fell, sending Dubai’s benchmark index to the lowest in almost seven years, as concern political unrest may spread to Saudi Arabia, the Arab world’s largest economy, sparked demand for safer assets.
Saudi Arabia’s Tadawul All Share Index slumped 3.9 percent to close at the lowest since April 2009 at 3:30 p.m in Riyadh. The DFM General Index declined 3.5 percent to 1,374.43, the lowest level since June 2004. The gauge has lost 15 percent since Tunisia’s Zine El Abidine Ben Ali was ousted in January. Emaar Properties PJSC retreated to the lowest since 2009 and Dubai Financial Market PJSC slumped 4.9 percent.
Investors are shunning assets in the Middle East and North Africa as the political turmoil, which started in Tunisia more than two months ago, expanded to Oman, Bahrain, Yemen, Libya and Iran. Websites have called for a nationwide Saudi “Day of Rage” on March 11 and March 20, Human Rights Watch said in a statement on its website on Feb. 28.
“A lot of the selling has been from onshore, local and regional investors; the speed of the decline tells you it’s pure panic,” said Dubai-based Ibrahim Masood, who helps manage about $400 million at Mashreqbank PSC. “On balance, I suspect that a few months down the road these levels would look like a steal.”
‘Risk May Spread’
Saudi Arabia’s benchmark stock index plunged the most in more than two years yesterday on concern disturbances may extend to the kingdom, the biggest supplier in the Organization of Petroleum Exporting Countries. The measure has tumbled 20 percent in the past 13 days, the longest losing streak since 1996. About 271 million shares changed hands, the most since May, according to data compiled by Bloomberg. Saudi nationals accounted for about 80 percent of stock purchases in February, according to the exchange’s website.
Prince Talal Bin Abdul Aziz Al Saud, a member of Saudi Arabia’s royal family, said on Feb. 17 that the kingdom may see protests unless King Abdullah introduces reforms, according to BBC Arabic TV. The king last week announced plans to spend about 110 billion riyals ($29 billion) on programs aimed at boosting housing, education and social welfare.
Governments from Jordan to Yemen have offered concessions to quell public discontent after popular uprisings toppled leaders in Tunisia and Egypt and led to protests across the Middle East and North Africa.
“There are fears political risk may spread,” to Saudi Arabia, said Mohammed Ali Yasin, chief investment officer at Abu Dhabi-based financial services company CAPM Investments PJSC.
Credit-default swaps on Saudi Arabia are the worst performing sovereign contracts this year, even though the kingdom has no debt to insure. Swaps almost doubled in two months to a more than 19-month high of 143 basis points from 75 at the start of 2011, according to CMA.
The six nations of the Gulf Cooperation Council, including Saudi Arabia and the United Arab Emirates, supply about a fifth of the world’s oil. Oil for April delivery gained as much as $1.84 to $101.47 in New York.
The Bloomberg GCC 200 Index of Persian Gulf stocks dropped 3.3 percent today, bringing declines this year to 15 percent. Emaar retreated 6 percent to 2.5 dirhams, the lowest since July 2009. Dubai Financial Market, the only Gulf Arab stock market to sell its own shares to the public, decreased to 1.17 dirhams, the lowest since March 2009.
In Abu Dhabi, Aldar Properties PJSC and Sorouh Real Estate Co. dropped to the lowest levels on record. Abu Dhabi’s biggest developers had their share-price estimates cut at HSBC Holdings Plc, citing a decline in the sheikhdom’s housing prices. Aldar slumped 9.3 percent to 1.27 dirhams and Sorouh slid 5.7 percent to 99 fils. HSBC cut the price estimates to 1.35 dirhams and 1.05 dirhams, respectively. Abu Dhabi’s ADX General Index lost 1.8 percent.
The cost of insuring the sovereign debt of Bahrain rose 13 basis points from yesterday’s close in London to 314, according to CMA prices for credit-default swaps. The Persian Gulf country’s BB All Share Index retreated 1 percent. Kuwait’s SE Price Index fell 2.6 percent and Qatar’s measure slumped 3.6 percent.
In Israel, the TA-25 Index dropped 0.7 percent and in the Levant, Jordan’s Amman SE General Index lost 1.3 percent. Morocco’s MADEX Free Float Index declined 0.3 percent at 3:09 p.m. in Casablanca.
The Tunisian bourse suspended trading from Feb. 28 until further notice, it said that day. Egypt stock trading is set to resume March 6 after a suspension of more than a month amid a popular revolution that toppled the 30-year-old regime of former President Hosni Mubarak. The measure lost 16 percent in the week ended Jan. 27, when it last traded.