Arab stocks sink on receding confidence, slip of global markets

Nov 6, 2009, 11:34 GMT

Amman - Arab stock markets plummeted for the second week in a row, reflecting retreating confidence on the part of investors who appeared increasingly geared to the performance of global bourses, financial analysts said Friday.

However, they pointed out that oil prices and the projected spending of the governments of the oil-rich Gulf countries would continue to act as key moving factors for regional markets.

'I believe receding confidence is prompting a sell-off across the board by disappointed investors,' an Amman-based portfolio manager told German press agency dpa.

'Arab bourses were apparently reacting to the conflicting indicators in the United States and other leading economies as to the advent of recovery,' he said.

'The plunge of Arab markets in tandem refers to an intensive selling by foreign investors for covering their positions at international bourses,' he added.

However, analysts stood by their earlier prophecy that oil prices would continue to have a tangible effect on regional markets in the coming weeks.

Saudi shares lost ground for the second consecutive week due to selling pressures that were prompted by profit taking tactics and suspicious news about the global upturn.

The Tadawul All Share Index (TASI) of the Arab world's largest stock exchange shed 1.5 per cent this week, closing at 6,343.12 points.

TASI is currently 32.1 per cent higher than the year's start, according to the weekly report of the Riyadh-based Bakheet Investment Group (BIG).

'The decline reflected investors' concerns about the contradictions that dominated the US economy last week, in addition to the negative news from Europe,' the report said.

The decline was led by the sectors of banking, financial services and telecommunications, the BIG said.

The group predicted that Saudi shares would witness 'gradual improvement' in the coming weeks, given the attractive prices of stocks and expectations that oil prices would continue their upward journey.

Jordanian shares continued their downward trend for the third week in a row due to liquidity shortage and selling by foreign funds, analysts said.

The all-share index of the Amman Stock Exchange lost 2.43 per cent this week, closing at 2,552 points, according to the ASE weekly report.

Kuwait's KSE all-share index closed week lower at 7,334 points compared with last week's close at 7,347 points.

The weak performance of the Kuwaiti stock market was blamed by analyst Maitham al-Shakhs from the Kuwait-based Global Investment House on 'speculation and the hesitation on the part of investors to enter the market at this juncture despite low stock prices'.

The benchmarks of the United Arab Emirates stock exchanges of Dubai and Abu Dhabi plummeted by 4.6 per cent and 3.4 per cent to close week respectively at 2,098 points and 2,917 points.

Egypt's AGX30 index, measuring the performance of the market's 30 most active stocks, sank 6.2 per cent, closing week at 6,535 points.