KUWAIT CITY (AFP) – Stock markets in the oil-rich Gulf states declined at the opening of trade on Wednesday, following two days of strong gains spurred by government moves to shore up the financial system.
The Dubai Financial Market, which surged more than 22 percent over the past two days, was down by five percent at 3,518.00 points.
Market leader, real estate developer Emaar, sank 6.3 percent, after surging 15 percent — the maximum authorized by regulators — on each of the previous two days.
The other UAE stock market, the Abu Dhabi Securities Exchange, which also gained 15 percent over the past two days, shed 1.7 percent to 3,540.54 points. The key real estate sector slumped 2.7 percent.
The Kuwait Stock Exchange, the second largest in the Arab world, opened down about two percent at 11,564.30 points.
The KSE had bucked the trend in other Gulf markets and dropped in the past two days in reaction to modest nine-month profits by a number of major banks. Market leader Zain telecom was down about 8.3 percent at one stage.
The tiny Muscat Securities market, which gained 14 percent in the past two days, dropped 1.2 percent. Bahrain Stock Exchange was down just 0.02 percent.
The Saudi stock market, the main Arab bourse, dived around eight percent at its opening later in the morning.
The Tadawul All-Shares Index (TASI), which had rebounded 17.5 percent in the past two days, later clawed back some of its losses and was down only 6.5 percent at around 6,400 points.
All 15 sectors dropped, with the leading petrochemicals and banks sectors shedding almost seven percent.
Over the past two days, the Saudi market recovered more than 55 billion dollars of capitalisation and now stands at close to 360 billion dollars.
However, the TASI is still down 42 percent on the year.
Governments in the region, which supplies about a fifth of world’s oil needs, have taken a number of actions to support their financial systems after stock markets sustained huge losses last week.
On Tuesday, the UAE made another 19 billion dollars available to local banks, bringing the total funds pledged since the beginning of the financial crisis to more than 32 billion dollars.
On Sunday, it had guaranteed deposits and savings at banks operating in the country, as well as interbank lending.
Saudi Arabia, Kuwait and Bahrain have slashed interest rates, pledged tens of billions of dollars of liquidity to domestic banks and eased lending restrictions.
Qatar also decided to buy between 10 percent and 20 percent of bank shares.