Gulf News - 20/5/2006

Hundreds of Saudis turned a forum into a rare public debate of the role of the government, banks and royal court members in a bourse crash, which has hit hundreds of thousands of small investors.

The privately organised forum in Jeddah, widely seen as the most liberal city in the kingdom, offered a rare opportunity for a public outpouring of grief and anger after the crash, which wiped off half of the value of the Arab world's largest bourse in 60 trading days.

"I'm getting a lot of (written) questions from the public asking 'where has our money gone?' moderator Abdullah Dahlan told the meeting.

More than 1,000 investors packed the auditorium hours before its start, a trickle compared to the estimated four million Saudis who trade in stocks and who suffered most from the crash.

The downturn which began in late February was sparked by a power struggle between the bourse regulator and cash-laden major speculators, with retail investors most of whom lack basic knowledge of market principles caught in the middle.

"Our market has been manipulated," Yassine Al Jafri, a prominent econ-omist, said, triggering noisy applause and cheers.

"There are questions that beg to be asked: Why has state spending slowed? Why the weak supply of shares when you see demand growing, and 64 per cent of capitalisation is controlled by the government (through state-owned firms)," he said.

The slump has dealt a blow to the government's drive to ensure a fairer sharing of wealth through investment in stocks.

Participants asked why the state had not floated oil giant Aramco and why it kept stakes of 70 per cent in top listed firms.

"In other countries, the state and financial institutions join efforts in times of crises. Why didn't banks give small investors a six-month reprieve on their debts?

"They can afford to do it, they make billions of riyals in profits," said Dahlan.

Insight: Counting the psychological cost

The ramifications of the crash go even deeper in a society where an employed Saudi supports an average of 5.3 people, far above peers in emerging countries like Venezuela where the rate is 2.8, said businessman Mohammad Abu Dawood.

One veiled woman, who did not identify herself, said: "There are women here who are asking men not to invest in the bourse because it has spoiled the mood in the household and destroyed their homes. They also beg of men not to invest under their (wives') names."

Some bankrupt Saudis were reported to have forced their wives to borrow money from banks to buy stocks, hoping for a market revival.