03 Mar 2011
Persian Gulf shares dropped, sending Dubai’s benchmark stock index to the lowest in almost seven years, on concern political unrest may spread to Saudi Arabia, the Middle East’s biggest oil producer.
Emaar Properties PJSC retreated to the lowest in more than a year and Dubai Financial Market PJSC, the only Gulf Arab stock market to sell its own shares to the public, slumped 4.9 percent. The DFM General Index declined 3.5 percent to 1,374.7, the lowest level since June 2004, at 12:13 p.m. in Dubai. The gauge has lost 15 percent since Tunisia’s Zine El Abidine Ben Ali was ousted in January. Saudi Arabia’s Tadawul All Share Index dropped 3.2 percent today, extending yesterday’s 6.8 percent slump.
Investors are shunning assets in the Middle East and North Africa as the political turmoil expanded to Oman, Bahrain, Yemen, Libya and Iran. Websites have called for a nationwide Saudi “Day of Rage” on March 11 and March 20, Human Rights Watch said in a statement on its website on Feb. 28. Saudi Arabia’s benchmark stock index plunged the most in more than two years yesterday on concern disturbances may extend to the kingdom, the biggest supplier in the Organization of Petroleum Exporting Countries.
“A lot of the selling has been from onshore, local and regional investors; the speed of the decline tells you it’s pure panic,” said Dubai-based Ibrahim Masood, who helps manage about $400 million at Mashreqbank PSC. “On balance, I suspect that a few months down the road these levels would look like a steal.”
Oil Prices
Prince Talal Bin Abdul Aziz Al Saud, a member of Saudi Arabia’s royal family, said on Feb. 17 that the kingdom may see protests unless King Abdullah introduces reforms, according to BBC Arabic TV. King Abdullah boosted spending on housing by 40 billion riyals ($10.7 billion) and the social security budget was raised by 1 billion riyals, according to a statement read on state-run on Feb. 23.
Oil gained for a second day in New York, trading above $100 a barrel, as demonstrations in Iran stoked concern the turmoil spreading across the Middle East may disrupt supplies from OPEC’s second-largest producer.
Oil for April delivery gained as much as $1.01 to $100.64 a barrel in electronic trading on the New York Mercantile Exchange. Prices are 26 percent higher compared with a year ago. The six nations of the Gulf Cooperation Council, including Saudi Arabia and the United Arab Emirates, supply about a fifth of the world’s oil.
Political Risk
Authorities in Saudi Arabia “should immediately release” Tawfiq al-Amir, a Shiite cleric in the country, who apparently was arrested after he called for a constitutional monarchy and equal rights for the Shiite minority, Human Rights Watch said in its statement.
The Bloomberg GCC 200 Index of Persian Gulf stocks dropped 1.6 percent today, bringing its decline to 15 percent this year. Emaar retreated 6.8 percent to 2.48 dirhams, the lowest since December 2009. The Dubai Financial Market decreased to 1.17 dirhams, the lowest since March 2009.
