Arab Times - 8/5/2006

Gulf stock markets dived on Sunday as volatility in the Saudi Arabian bourse panicked investors and battered sentiment across the region. Saudi stocks plunged more than 9.5 percent in early trade, following a 9.6 percent drop on Saturday, the sharpest daily fall on record. The Saudi market recovered ground later to close 1.58 percent down at 11,345.54 points, but by then other regional markets were closed and the damage had been done. “There was some institutional buying, like Saudi Investment Bank’s al-Naeem fund, but on the other hand, there are big speculators who take advantage of the low morale in the market to achieve a quick profit,” a senior trader said.

“This volatility is helping neither the market nor investors’ heads to cool off.” Traders said Al-Naeem, which is estimated to be holding equity worth 4 billion riyals ($1.07 billion), focused its buying on the two largest listed firms, Saudi Basic Industries Corp. (SABIC) and Saudi Telecom (STC) .. SABIC ended down 0.16 percent after much heavier losses earlier, and STC closed 0.44 percent higher after also recovering from a sharp early fall.
Dubai shares ended down 5.06 percent at 490.14 points, crashing below the 500-point level and hitting their lowest levels since February 2005. Abu Dhabi stocks sank 5.69 percent, also to 15-month lows and Qatar shares fell 1.89 percent to 8,749.77 points.

Dubai market bellwether Emaar Properties dived 8.71 percent to 12.05 dirhams. Analysts said margin calls were clustered under 14 dirhams, extending the stock’s slide after it broke below that level. The Kuwait stock index fell 2.61 percent, dropping below 10,000 points to close at 9,792.80. Analysts in Kuwait said the market there was less expensive than Saudi and other Gulf bourses, but this did not prevent panicky investors from selling.

“A psychological state of mind was created as analysts linked the Kuwait market to the rest of the Gulf,” said Mustafa Behbehani, director of Kuwait Gulf Consulting Co. Naser al-Nafisi, general manager of Kuwait’s al-Joman Centre for Economic Consultancy, also said Kuwaiti stocks were cheap compared to Saudi and some of the selling was irrational. “What is happening on the Kuwaiti market is illogical, we are in one valley and the Saudi market is in another valley altogether,” he said. “The PE of the Kuwait bourse is 10 compared to 20 and 30 for Saudi and the rest of the Gulf.” But he said investors in Kuwait were also concerned by first-quarter corporate profits.