Arab stocks slip on world growth woes, Ramadan, oil prices

Aug 13, 2010, 13:58 GMT

Amman - Arab stock markets closed the week lower amid pressure from the global market slump, a gloomy outlook for the world economic recovery and falling oil prices, financial analysts said Friday.

They expected the Muslim fasting month of Ramadan, which started on Wednesday, to fuel the negative sentiment which already dominates regional bourses.

'We believe Arab stock markets, particularly in the Gulf region, will continue to reflect what happens on global bourses,' Wajdi Makhamreh, CEO of the Amman-based Noor Investments brokerage, told the German Press Agency dpa.

Makhamreh and other analysts expected the robust European growth revealed on Friday to have a positive impact on Middle East markets through increasing demand for oil and spurring prices of crude oil.

Oil prices fell more than 5 per cent this week due to discouraging indicators of the US economy, pushing down prices of Gulf stocks.

'Higher oil prices mean larger surplus petrodollars that seek investment outlets including stock markets,' Makhamreh said.

Saudi shares lost ground mainly due to falling oil prices, faltering world recovery and the departure of many Saudi investors for summer vacations that coincide this year with the fasting month.

The Tadawul All Share Index (TASI) of the Arab world's largest stock exchange shed 1.79 per cent this week, closing at 6,187.97 points.

The fall of newly-issued stocks below their face value appeared to have aggravated the situation, member of the Saudi Economic Society, Abdul Hamid Omari, said.

He attributed this phenomenon to the lack of confidence and withdrawal of Saudi investors from the market due to the advent of the month of Ramadan.

Omari expected dealings on the Saudi stock exchange to be flat during the fasting month, barring any negative international developments.

Jordanian shares were volatile this week due to persisting liquidity crunch and lack of incentives, Makhamreh said.

The all-share index of the Amman Stock Exchange shed 0.75 per cent this week, closing at 2,248 points, according to the ASE weekly report.

Kuwaiti shares edged higher this week, receiving support from the banking sector, analysts said.

Kuwait's KSE all-share index closed week at 6,671 up from last week's close at 6,666 points.

United Arab Emirates stocks plunged this week due to profit taking and the continuing ambiguity over the Dubai World debt crisis, analysts said.

The benchmarks of the Dubai and Abu Dhabi exchanges fell 3 per cent and 2.28 per cent, closing respectively at 1,472 points and 2,471 points.

Egypt's AGX30 index, which measures the performance of the market's 30 most active stocks, shed 1.1 per cent on weekly basis, to close at 6,333 points.