The Souk al Manakh: Kuwait's first big bubble



In the first oil crisis of 1973, Arab states placed an embargo on crude exports to the US in protest at its support of Israel in the Yom Kippur War. That was followed by the oil crisis of 1979, when Iran's energy production fell after the Iranian revolution. Those events drove oil prices to new heights and made many people in the Gulf wealthy. In Kuwait, the new-found wealth flooded the economy suddenly and, in the long run, destructively.

One result of higher oil revenues in Kuwait was a new appetite for investment that led to the establishment of the Souk al Manakh, a market separate from the main Kuwait Stock Exchange on which people could trade in shares of foreign companies. Many Kuwaitis borrowed from banks to finance trading on the Souk al Manakh, helping push the value of securities listed there to absurd heights. By the early 1980s, the market was the third-largest in the world.

But like all bubbles, the Souk al Manakh's burst. It happened in 1982, set off by a bounced cheque that touched off a cascade of margin calls and losses. Most of Kuwait's banks became insolvent because of the crisis, having lent heavily to traders who could no longer afford to repay loans. The government responded by bailing out the banks, setting a precedent that survives to this day. Many traders, investors and even consumers in Kuwait now expect government help in times of crisis, a classic example of "moral hazard", or the effect of governments coming to the rescue during periods of financial turmoil.

Echoes of the Souk al Manakh crisis are still discernible in Kuwait's speculative and rumour-fed markets, as well as in frequent pleas from investors for government aid during market slumps. afitch@thenational.ae

TOUCH RULES

Touch is derived from rugby league. Teams consist of up to 14 players with a maximum of six on the field at any time.

Teams can make as many substitutions as they want during the 40 minute matches.

Similar to rugby league, the attacking team has six attempts - or touches - before possession changes over.

A touch is any contact between the player with the ball and a defender, and must be with minimum force.

After a touch the player performs a “roll-ball” - similar to the play-the-ball in league - stepping over or rolling the ball between the feet.

At the roll-ball, the defenders have to retreat a minimum of five metres.

A touchdown is scored when an attacking player places the ball on or over the score-line.

Places to go for free coffee
  • Cherish Cafe Dubai, Dubai Investment Park, are giving away free coffees all day. 
  • La Terrace, Four Points by Sheraton Bur Dubai, are serving their first 50 guests one coffee and four bite-sized cakes
  • Wild & The Moon will be giving away a free espresso with every purchase on International Coffee Day
  • Orange Wheels welcome parents are to sit, relax and enjoy goodies at ‘Café O’ along with a free coffee
Company profile

Company name: Fasset
Started: 2019
Founders: Mohammad Raafi Hossain, Daniel Ahmed
Based: Dubai
Sector: FinTech
Initial investment: $2.45 million
Current number of staff: 86
Investment stage: Pre-series B
Investors: Investcorp, Liberty City Ventures, Fatima Gobi Ventures, Primal Capital, Wealthwell Ventures, FHS Capital, VN2 Capital, local family offices