Daily Times - 14/5/2006

Saudi Arabia on Friday replaced its chief stock market regulator, who had borne the brunt of public outrage over a crash that has ruined tens of thousands of investors in the world’s biggest oil exporter.

State television announced King Abdullah’s decree naming Abdelrahman al-Tuweijri, a former representative to the International Monetary Fund, as the head of the Capital Markets Authority, which runs the Arab world’s largest bourse.

Tuweijri replaces Jammaz al-Suhaimi, a controversial figure who tried to stamp his authority on a notoriously opaque and volatile market that the government had hoped would give ordinary Saudis a stake in the kingdom’s vast oil wealth.

In the process Suhaimi found himself at the centre of the confidence crisis that swept the bourse, halving its value in three months and wiping some $400 billion off investors’ books.

Tuweijri said restoring confidence would be a priority after the crash that has hammered many of the 9 million Saudis half the population who play the market, often borrowing heavily to buy stocks.

“The decline in blue-chip stocks has caused distress, which has affected millions of citizens,” Tuweijri said on Saudi-owned Al Arabiya television.

“I hope to see organised and balanced trading where the CMA plays its desired role, which inspires confidence,” said Tuweijri, who heads the Supreme Economic Council, a major policymaking body.

There was no immediate comment from Suhaimi, who blamed many of the ills of the stock market on the wealthy speculators who dominate the bourse. His attempts to clean up the market saw him hailed as a reformer in some quarters and vilified for ham-handed tactics in others. “Suhaimi is a scapegoat because the crisis is much deeper. It revolves around more than one man,” said Abdelmounaim Addas of Zad Investment.

Anger: Suhaimi became the lightning rod for public discontent over the crash, even though analysts say the Saudi market had been ripe for collapse after record oil revenues fired a months-long rally that made it one of the most expensive in the world.

“Thank God and good riddance!” said Omar Salem in one of the Internet chatrooms to which thousands of Saudis have turned to vent their anger in a country with no tolerance of public protest. “Congratulations! God save King Abdullah,” said Abdul Hakim.

The government of King Abdullah, whose media persona is of a modernising father figure, encouraged stock investment, hoping the bourse would enable citizens to share in the oil boom and iron out some of the country’s huge disparities of wealth.

The crash shattered those plans and many small investors say Saudi Arabia’s ultra-rich have abused an initiative aimed at helping the less well-off. “The problem is the political system,” London-based political analyst Mai Yamani.

“They have a serious problem with structural reforms. And they can’t just include people with shares. They have to give people real reforms and it won’t help by sacking one man or blaming one organisation.”

Suhaimi said he was trying to wrest control of the bourse from powerful speculators who account for most of the market’s liquidity. The crash only began in late February, some analysts say, when the speculators stopped playing the market.