Arab stocks subdued by geopolitics, recovery woes

Jan 28, 2011, 14:05 GMT

Amman - Arab stock markets were mixed this week, reflecting concerns over Egyptian protests, world recovery reports and dividends, financial analysts said.

However, they expected regional markets to receive backing from the robust oil prices and annual earnings.

'I believe Arab markets, particularly the Egyptian bourse, will continue to suffer as a result of the escalating protests in Egypt and possibly elsewhere in the Arab world,' an Amman-based portfolio manager told German Press Agency dpa.

'There is probability that the psychological spill-overs of the Egyptian turmoil will expand to reach other Arab markets,' he said.

Nevertheless, he pointed out that regional stock markets stood to gain in the medium and long terms as a result of high oil prices.

Egyptian stocks suffered an unprecedented setback over the past couple of days as panicked local and foreign investors resorted to sell-off to avoid further losses.

Egypt's main AGX 30 index plummeted 10.52 per cent on Thursday bringing the total plunge in two days to 15.7 per cent, despite the intervention by the bourse's authority to stop trading for 30 minutes.

'The dive reflects an exaggerated panic on the part of individual investors who were forced to dump their holdings of stocks,' Egyptian analyst Mohsen Adel said.

He said that the Egyptian market capitalization lost more than 12 billion dollars over the past two days.

Saudi shares were volatile this week with investors trying to evaluate the annual results and the fallout of international and Arab factors, analysts said.

The Tadawul All Share Index (TASI) of the Arab world's largest stock exchange gained 0.6 per cent on weekly basis, closing at 6,697.79 points, and receiving support mainly from the banking, industrial and cement sectors.

Despite the failure of the index to crash the 6,700- point barrier, Saudi stocks are expected to find support from the rising prices of crude and petrochemical products, Saudi analyst Walid Abul-Hadi said.

He also expected an expanding role for the Saudi banking sector after surmounting its toxic loans problem.

'We think the banking sector is heading to more active role particularly in the sphere of real estate financing,' he said.

The Amman Stock Market was the scene this week for profit taking and speculative moves amid calls for the resignation of Prime Minister Samir Rifai's government.

The ASE all-share index shed 0.72 per cent this week, to close at 2,340 points mainly due to weak foreign buying, analysts said.

Kuwait's KSE all-share index gained 0.69 per cent on weekly basis, closing at 6,944 points, as investors awaited the official signing of the multi-billion-dollar deal involving the sale of a 46 per cent stake in Kuwait's Zain mobile group to the United Arab Emirates Etislat telecommunication firm.

The UAE stocks reflected mixed performance this week. The benchmark of the Dubai stock exchange closed week up 0.21 per cent, at 1,612 points, while the index of the Abu Dhabi bourse fell 0.92 per cent at 2,659 points.

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