Gulf stocks suffer losses

Stock markets declined at the opening of trade following two days of strong gains spurred by government action.

Stock markets across the Gulf region declined at the opening of trade today, 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 per cent over the past two days, was down by five per cent at 3,518.00 points. The market leader, real estate developer Emaar, sank 6.3 per cent, after surging 15 per cent - the maximum authorised by regulators - on each of the previous two days.

The other UAE stock market, the Abu Dhabi Securities Exchange, which also gained 15 per cent over the past two days, shed 1.7 per cent to 3,540.54 points. The key real estate sector slumped 2.7 per cent. The Kuwait Stock Exchange, the second largest in the Arab world, opened down about two per cent 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. The market leader Zain telecom was down about 8.3 per cent at one stage.

The Muscat Securities market, which gained 14 per cent in the past two days, dropped 1.2 per cent. Bahrain Stock Exchange was down just 0.02 per cent. The Saudi stock market, the main Arab bourse, dived around eight per cent at its opening later in the morning. The Tadawul All-Shares Index (TASI), which had rebounded 17.5 per cent in the past two days, later clawed back some of its losses and was down only 6.5 per cent at around 6,400 points. All 15 sectors dropped, with the leading petrochemicals and banks sectors shedding almost seven per cent. Over the past two days, the Saudi market recovered more than US$55 billion of capitalisation. Governments in the region have taken a number of actions to support their financial systems after stock markets sustained huge losses last week.

On Tuesday, the UAE announced it will pour another Dh70bn into the country's banks in an action aimed at helping support the economy. On Sunday, it 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 per cent and 20 per cent of bank shares. *AFP