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Wed 2 Mar 2011 11:54 AM

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Saudi TASI slumps to lowest close since April 2009

Middle East shares fell, sending Dubai's benchmark index to the lowest in almost seven years

Saudi TASI slumps to lowest close since April 2009
STOCK WATCH: Dubai’s benchmark stock index dropped to the lowest in almost seven years (Getty Images)

Middle East shares fell, sending
Dubai’s benchmark index to the lowest in almost seven years, as concern
political unrest may spread to Saudi Arabia, the Arab world’s largest economy,
sparked demand for safer assets.

Saudi Arabia’s Tadawul All Share
Index slumped 3.9 percent to close at the lowest since April 2009 at 3:30pm in

The DFM General Index declined 3.5
percent to 1,374.43, the lowest level since June 2004. The gauge has lost 15
percent since Tunisia’s Zine El Abidine Ben Ali was ousted in January. Emaar
Properties retreated to the lowest since 2009 and Dubai Financial Market slumped
4.9 percent.

Investors are shunning assets in the
Middle East and North Africa as the political turmoil, which started in Tunisia
more than two months ago, 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.

“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. “On balance, I suspect that a few months down the road
these levels would look like a steal.”

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 Organisation of Petroleum
Exporting Countries. The measure has tumbled 20 percent in the past 13 days,
the longest losing streak since 1996. About 271 million shares changed hands,
the most since May, according to data compiled by Bloomberg. Saudi nationals
accounted for about 80 percent of stock purchases in February, according to the
exchange’s website.

Prince Talal Bin Abdul Aziz Al Saud,
a member of Saudi Arabia’s royal family, said on February 17 that the kingdom
may see protests unless King Abdullah introduces reforms, according to BBC
Arabic TV. The king last week announced plans to spend about SR110bn ($29bn) on
programs aimed at boosting housing, education and social welfare.

Governments from Jordan to Yemen
have offered concessions to quell public discontent after popular uprisings
toppled leaders in Tunisia and Egypt and led to protests across the Middle East
and North Africa.

“There are fears political risk may
spread,” to Saudi Arabia, said Mohammed Ali Yasin, chief investment officer at
Abu Dhabi-based financial services company CAPM Investments.

Credit-default swaps on Saudi Arabia
are the worst performing sovereign contracts this year, even though the kingdom
has no debt to insure. Swaps almost doubled in two months to a more than
19-month high of 143 basis points from 75 at the start of 2011, according to CMA.

The six nations of the Gulf
Cooperation Council, including Saudi Arabia and the UAE rates, supply about a
fifth of the world’s oil. 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 Bloomberg GCC 200 Index of
Persian Gulf stocks dropped 3.3 percent today, bringing declines this year to
15 percent. Emaar retreated 6 percent to AED2.5, the lowest since July 2009.
Dubai Financial Market, the only Gulf Arab stock market to sell its own shares
to the public, decreased to AED1.17, the lowest since March 2009.

In Abu Dhabi, Aldar Properties and
Sorouh Real Estate Co dropped to the lowest levels on record. Abu Dhabi’s
biggest developers had their share-price estimates cut at HSBC Holdings, citing
a decline in the sheikhdom’s housing prices. Aldar slumped 9.3 percent to AED1.27
and Sorouh slid 5.7 percent to 99 fils. HSBC cut the price estimates to AED1.35
and AED1.05, respectively. Abu Dhabi’s ADX General Index lost 1.8 percent.

The cost of insuring the sovereign
debt of Bahrain rose 13 basis points from yesterday’s close in London to 314,
according to CMA prices for credit-default swaps. The Arabian Gulf country’s BB
All Share Index retreated 1 percent. Kuwait’s SE Price Index fell 2.6 percent
and Qatar’s measure slumped 3.6 percent.

The Tunisian bourse suspended
trading from February 28 until further notice, it said that day. Egypt stock
trading is set to resume March 6 after a suspension of more than a month amid a
popular revolution that toppled the 30-year-old regime of former President
Hosni Mubarak. The measure lost 16 percent in the week ended Jan. 27, when it
last traded.


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