Saudi exchange tumbles on Egypt protests

A burnt out car is seen on the street in front of a burnt and looted police station, in the Khalifa neighbourhood of Cairo, on Saturday. Photo: AP.  

Saudi Arabia’s stock exchange tumbled by over six percent on Saturday, setting the stage for other regional markets to drop as concerns mounted about the violent protests in Egypt that presented the most serious challenge to President Hosni Mubarak’s roughly 30-year rule.

The Saudi Tadawul was down 6.27 percent to 6,278.04 points by about 3-15 p.m. Saudi time. The market in Saudi Arabia, where the start of the work week is Saturday, was the first to react to the violence in Egypt and the drop in the TASI offered a window into the potential battering that could emerge when other regional markets reopen on Sunday.

“The fall is due to sentiment about what’s happening in Egypt, and also in the U.S. because the Dow went down” on Friday, said John Sfakianakis, chief economist at the Riyadh-based Banque Saudi Fransi-Credit Agricole Group.

“You have some collateral damage which is related to investors .... who have exposure in Egypt, and are trying to hedge that exposure by selling down their positions in Saudi Arabia,” he said.

Tens of thousands of protesters clashed with riot police on Friday, the fourth day of violent demonstrations in Egypt. The protesters have demanded Mr. Mubarak’s ouster and measures to deal with the crippling poverty in the country, rampant corruption and the growing disparity in income distribution.

The rioting - inspired by similar protests in Tunisia two weeks earlier - prompted Mr. Mubarak, who has ruled the Arab world’s most populous nation for nearly 30 years, to ask his cabinet to step down. But that move appears unlikely to significantly allay the anger of Egyptians who argue that the 82-year-old leader is sorely out of touch with their daily lives.

The violence sent Egypt’s benchmark index tumbling almost 17 percent over two days, and analysts expect that the violence on Friday will fuel another plunge on the Egyptian Exchange and ripple across other regional markets.

“The momentum is there,” said Mr. Sfakianakis, predicting that regional markets drop.

“There’s no reason to expect the Saudi market to go up because the general sentiment is sell-off and wait- and-see rather than sell-off and immediate buying,” he said.

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Printable version | Jan 26, 2022 8:12:23 PM |

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