KUWAIT CITY (AFP) — Stock markets in the energy-rich Gulf states opened the week’s trading Sunday sharply down with the Dubai Financial Market shedding six percent.
The Saudi bourse, the largest in the Arab world, also continued its slump, shedding about half a percentage point after dropping almost six percent on Saturday, the week’s opening day in oil powerhouse Saudi Arabia. It remained below the 6,000-point mark.
The Kuwait Stock Exchange, the second largest Arab bourse, was down 2.9 percent despite the government pumping nearly two billion dollars so far into the banking system.
Kuwait Investment Authority, the oil-rich emirate’s sovereign wealth fund, has also injected several hundred million dollars into investment funds operating on the KSE.
The Abu Dhabi Securities Exchange, the other market in the United Arab Emirates, shed 4.2 percent affected mainly by the real estate and energy sectors which shed 4.4 percent and about six percent respectively.
The Doha Securities Market dropped 7.4 percent to just above the 7,000-point mark.
The tiny Muscat Securities Market was down 5.3 percent to below 7,000 points and was trading at a year’s low.
At one stage, the DFM Index dropped below the psychological barrier of 3,000 points but went on to trade slightly higher at 3,016.65, down 5.7 percent.
The slide in the DFM came after Dubai authorities changed the movement of stocks from a maximum of 15 percent down to 10 percent in a bid to limit losses in a single day.
Market leader giant real estate developer Emaar almost slid by the maximum cap after shedding 9.3 percent. The real estate index was down by 9.2 percent.
The slide in the Gulf stock markets followed the trend in Saudi Arabia.
All the Gulf stock markets experienced turbulence last week with DFM shedding 22.5 percent, Abu Dhabi and Qatar around 19 percent each and Saudi Arabia 17.4 percent.
They however reversed course at the end of the week with handsome gains after several Gulf states cut interest rates to make lending cheaper, following a coordinated interest rate cut by major world central banks, and promised to inject billions of dollars into the financial system.
Gulf economists have attributed the slide in the Gulf markets to panic from the impact of the global financial turmoil that has strongly shaken investor confidence and led to a wave of sell-offs.
They also said investors were worried over the fate of Gulf government and private foreign investments, estimated at 2.5 trillion dollars.
The massive drop in oil prices also appears to have weighed heavily on the markets in the region, which pumps about 16 million barrels per day. Crude prices closed in New York Friday below 80 dollars a barrel.
Oil income of the six Gulf states is estimated to have dropped by one billion dollars every day from its level in July when oil prices peaked above 147 dollars a barrel.
On Friday, the World Bank warned that a significant drop in oil prices would bring down the level of economic growth in oil-exporting countries.
US President George W. Bush said on Saturday, after crisis talks with G7 finance ministers, that all agreed the world financial meltdown required “a serious global response.”
The finance chiefs of the Group of Seven major advanced economies had announced on Friday a broad five-point action plan to tackle a global crisis that has markets and the banking system reeling.
The G7 pledged to use “all available tools” to support key institutions and prevent their failure in the worst financial crisis since the 1930s Great Depression.