CAIRO, Egypt — Saudi Arabia’s benchmark stock index dropped 5 per cent on Sunday to its lowest point in months, and other regional indices also dipped, as violence in Libya and protests in Gulf nation of Oman weighed heavily on investor confidence.
The declines, which have run unabated for over a week, reflected the mounting investor unease with the impact of the anti-regime protests that have swept though the Arab world, leading to the ouster of Tunisia and Egypt’s presidents and a bloody crackdown by Libyan leader Moammar Gadhafi, who is frantically trying to cling to power.
The protests have spread to the Gulf, adding to concerns that global oil supplies from the key exporting region could be affected. In Bahrain, protests by the Shiite majority raged against the minority Sunni monarchy, while in Oman, police fired rubber bullets and tear gas at protesters in clashes that left one person dead.
“What’s going on in Libya is impacting the rest of the markets.” said Irfan Ellam, head of research at the Dubai, United Arab Emirates-based Al Mal Capital.
The Saudi Tadawul All Shares Index’s 5 per cent decline brought it to 5,950 points, its lowest level in about six months, analysts said, and pushed its year-to-date losses to over 10 per cent. All sectors of the market were hit, with shares of the Saudi Basic Industries Corp., the world’s largest petrochemicals manufacturer, down 2.6 per cent to 93.75 riyals by almost 4 p.m. local time.
The protests in Libya are the first to seriously affect a member of the Organization of the Petroleum Exporting Countries. A disruption in production in the North African nation temporarily pushed the U.S. crude oil benchmark futures contract to over $100 per barrel late last week, while the London-based Brent futures contract remains well above $110 per barrel.
In Dubai, the Dubai Financial Market’s stock index closed down 0.86 per cent, to 1,466 points. The decline brought its losses so far this year to slightly over 10 per cent.
Oman’s stock index was down 2.83 per cent as protests began to surface there. In Qatar, which has the world’s second highest per capita income, the main index was down 0.21 per cent to 8,193 points.
Shares of Dubai-based developer Emaar Properties, the company behind the world’s tallest building, fell 2.4 per cent.
Brokers said the declines in the markets were reflections of uncertainty about the direction the protests would take and whether they would seriously affect the Gulf.
Bahrain has been facing its own protests, while calls for reform are mounting in Saudi Arabia where the king last week decreed sweeping measures to help alleviate the financial burden for the kingdom’s lower income citizens.
On Sunday, Saudi King Abdullah announced new measures to shift government sector workers to permanent contracts, instead of the temporary contracts that deprive them of basic benefits like pensions.
Trading in the markets appeared relatively subdued, with sentiment — as in oil markets — taking precedence over fundamentals.
“There are a lot of people sitting on the sidelines,” said Ellam. “We’re seeing deep value in quite a few areas,” such as the Emirates Integrated Telecommunications Company, which was one of the few to see its share price climb. The shares of the company, also known as “du,” climbed 0.68 per cent to 2.98 dirhams.
“Volumes are either normal or below normal,” Ellam said of the trading activity. “It’s not a case of excessive volumes.”