Sell offs on Gulf stock markets in July
Despite low levels of general trading activity, sell offs characterized the Gulf’s stock markets in July 2000.
During July, the Saudi stock market’s performance contrasted with the regional trend. Saudi stocks recorded impressive gains, enough to counter the decline in other regional bourses, reported Gulf News. Saudi stocks received a boost in July due to strong first half results announced by listed companies, especially SABIC. The Saudi market’s main index gained 4 percent during July, recording a record high on the strength of blue-chip gains. SABIC ended the month up 6.3 percent, while the share prices of Saudi Arab Bank and Safco rose 9 percent and 3.9 percent respectively. The Saudi bourse continued its strong performance in August, due largely to rising oil prices on the international markets, reported Middle East Capital Group.
The picture was much more bleak for the Kuwait Stock Exchange in July. Its index dropped below the 1,400-point psychological barrier in early July, representing a 5.3 percent decline from April’s high. Part of the deterioration may be accounted for by the traditionally slow summer trading period. However, indecisiveness regarding the nature and timing of implementing overdue reforms affected the credibility of the market as a whole. Losses were recorded across the Kuwaiti Exchange, with particularly poor performances documented by blue chips Gulf Cable Electrical Industries Co. and Al Ahelia Insurance.
Oman’s Muscat Securities Market lost 3 percent of its value in July, bringing its decline thus far in 2000 to 18 percent. In an attempt to restore investor confidence, the market undertook a number of measures such as introducing a new law to increase transparency and minimize insider trading. It also appointed HSBC as advisor to bail out firms experiencing financial difficulty. Earlier in July, Oman’s bourse signed an agreement with the Bombay Stock Exchange to cross-list shares on both exchanges as an incentive for foreign investors to enter the Omani market. A restrictive loan policy imposed by the central bank created investor worries about a drop in banking sector profitability, which were exacerbated by declining profits of National Bank of Oman and Commercial Bank of Oman.
Bahrain’s exchange remained hampered by a liquidity crisis, and stock prices fell throughout July. By mid-August, the market had hit a three-year low.
Apart from Saudi Arabia, Qatar was the only other Gulf bourse to record gains in July. By the second half of the month, the market gained strength on the heels of Qatar Telecommunications Co. (Q-TEL) and Qatar National Bank. -(Albawaba-MEBG)