Al Jazeera.net - 4/5/2006
An attempt to spread Saudi Arabia's oil wealth through mass share ownership has ended in tears for many ordinary Saudis after a stock market crash.
It was meant to be Saudi Arabia's bold effort at fairly distributing the vast wealth of another oil boom.
But hundreds of thousands have had their fingers burnt in a stock market crash since February that has sheared 40% from the value of the Arab world's largest bourse.
In the past three years, up to nine million Saudis, or half the population, have started playing the market in the conservative desert state, whose strict brand of Islam outlaws standard forms of gambling.
They were encouraged by a government which hoped the bourse would enable citizens to share in the economic boom that has come with a rise in world oil prices not seen since the 1970s. It hoped that would help to iron out some of the country's huge disparities of wealth.
Now they are hesitant to return to the market and many say that Saudi Arabia's ultra-rich have abused an initiative intended to help the less well-off.
Abdullah, a photographer who lost 400,000 riyals ($107,000) since investing five months ago, said: "The psychology has changed. Now no one is interested in the market, no one is going to put their money back there so easily."
Hoping to buy himself a fancy villa, Abdullah borrowed money from a bank and then added some of his wife's savings to his own, before placing 500,000 riyals ($133,000) in last year's boom market.
"The market regulator is to blame. It should not have allowed the market to go up so far and to let these people manipulate it at will," he said.
"Ordinary folks like me lost, and what fault is it of ours?"
The government and its Capital Markets Authority (CMA) have blamed the crash on wealthy, sophisticated speculators who drove prices to record levels over the past year, then pulled out of the market when the CMA tried to impose order.
Before, the media raved about teachers and pupils skipping class to track their stock options and mind their portfolios.
Now, they relate tales of bankruptcy, reclaimed houses and heart attacks in trading rooms.
Sociologist Azza al-Mihdar said: "It has been incredibly negative. Marital relations have been hurt, people have neglected their jobs.
"I know many who gave up working just so they could give all their time to playing the bourse.
In an authoritarian state with no tolerance of public protest or room for political expression, thousands of Saudis have turned to internet chatrooms to vent their anger.
Columnist Khalid al-Majid, on one website this week, said: "What started as a correction ended as a major theft of defenceless people by a mafia committing cold-hearted robbery.
"The stock market is creating a rupture in society that will not be easily fixed. We are a people heading for poverty. What do we imagine our situation will be when this boom is over?" he said.
Though there has been no danger to the country's wider economic health, the government has had to be seen as acting to counter the deep sense of injustice.
K ing Abdullah, whose media persona is of a modernising father figure, issued a decree on Sunday cutting domestic fuel prices by 30%. The CMA has pledged to "out" speculators and revolutionise the market information flow.
The government says its project to involve as many as possible in ownership of national firms is still on track.
Abdullah Shamasi, editor of the economic magazine al-Eqtisadiah, said: "It's still alive and the state is still encouraging citizens into the market.
"Even the 'professional investors' lost millions of riyals. We can't say that the speculators gained and the small guy lost. Everyone lost."
Paying the price
For one cleric, though, some Saudis are paying the price for having let greed eclipse their devotion to God.
Shaikh Ayidh al-Garni was quoted this week as saying at a lecture, "It's shameful that some good Muslims became so preoccupied with commerce and shares that they missed daily prayers and would only open the Quran once a week on a Friday."
Yet al-Garni, one of Saudi Arabia's most influential shaikhs, was careful to give his blessing to entering the bourse.
"Show me the way to market!" he said, citing a saying by a companion of the Prophet Muhammad.