Arab stock markets fall sharply

Associated Press , THE JERUSALEM POST

Stocks markets across the Arab world recorded steep losses Tuesday, with Egypt's benchmark index hitting a two-year low while, in Kuwait, a lawyer sued to halt trading in his country's exchange as investors found little to cheer about amid a financial crisis that has roiled global markets. On its first day of trading following a weeklong series of religious and national holidays, the Cairo and Alexandria Stock Exchange's benchmark CASE 30 index was down by over 16.4 percent, to 5,896.8, a drop that analysts attributed to the bourse reacting to precipitous slides in other world markets over the past few days.

So far this year, the CASE has been down over 4,650 points, or 44 percent.

CASE officials temporarily halted trading after shares of several major companies plummeted below the 10 percent threshold, Egypt's Middle East News Agency reported.

Analysts said some companies saw their shares drop by as much as 40 percent, albeit on low volume trading.

"There is an element of panic in the market," said Wael Ziada, head of Egypt research with EFG Hermes. Ultimately, "it's not very different from the losses in the markets, in general, over the past few days."

In Saudi Arabia, the benchmark Tadawul All Shares Index was off 7 percent, a day after hitting a four year low with a 9.81 percent drop. Dubai's DFM Index fell 5 percent to close at 3,369.15 points, according to the exchange's Web site.

In Kuwait, attorney Adel al-Abdul Hadi filed suit on behalf of stock broker Khaled al-Awadi to compel the government to temporarily close the exchange to curb losses. The Kuwait Stock Exchange closed down about 2.64 percent on Tuesday and had shed 3.45 percent on Monday.

The case was to go before a judge on Thursday, and reflected the level of concern in a region where even the Gulf countries' vast oil wealth has not shielded it from the global financial crisis and, in most cases, double-digit inflation.

Kuwait's government, like others in the Gulf region, has sought to reassure investors, stressing that it will step in, as necessary, to ward off a similar credit crunch.

Last month, the United Arab Emirates' central bank launched a 50 billion dirham (US$13.6 billion) lending facility from which local banks could draw on. Saudi Arabia, the Arab world's largest economy, has yet to take a step but officials have indicated that the government would step in, if needed.

While world markets rebounded on Tuesday, after tumbling sharply a day earlier, the Gulf and other Arab markets have been hard hit _ largely reflecting concerns in broader emerging markets.

The declines also reflect market adjustments as the exchanges reopened after being closed for a week following the end of the Muslim holy month of Ramadan a week ago.

"This is just the (Egyptian) market catching up with what is happening," said Ziada. But he cautioned that "the main trend, which is significant volatility, will continue for some time."

The slump marked a more than two-year low for the market, when the CASE 30 stood at 5904.79 points on August 20, 2006.

Ziada said that some of the heavyweight companies comprising the CASE 30 saw their share values plunge.

Orascom Construction Industries was down 20 percent, Orascom Telecom, the region's telecommunications giant, saw its shares fall by slightly more than 10 percent and CIB, the country's biggest commercial bank, was down about 20 percent.
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