morning......perhaps this is why futures gave back some gains ......udi exchange leads drop in Mideast markets
TAREK EL-TABLAWY - AP - 6 mins ago
CAIRO (AP) — Saudi Arabia's main benchmark stock index has plummeted by over 7 percent Tuesday, in a drop fueled by mounting unrest in neighboring Gulf Arab nations and reports of the arrest of a prominent Shiite cleric in the Sunni Muslim nation.
The Saudi All Shares Index was down 7.73 percent, to 5,482 points, by 3:15 p.m., building on an almost 6 percent decline over the past two days.
Other Gulf exchanges that take their cues from the Saudi market had closed by the time the market in Riyadh had changed course and shifted deep into the red. Whatever moderate gains they posted on Tuesday were likely to be erased on Wednesday, analysts said.
"These are huge losses for one day," said John Sfakianakis, chief economist with the Riyadh, Saudi Arabia-based Banque Saudi-Fransi, noting that a key catalyst was the unrest in Libya and other Arab countries, including Saudi neighbors Oman and Bahrain. "There is a definite selling off, and observing of the market from far away."
The unrest in the Arab region, that has been brewing for the past few weeks, has spread to the Gulf nations, raising concerns that it could affect the OPEC kingpin. Saudi Arabia sits atop the world's largest reserves of conventional crude and crude traders and investors are worried that anti-government demonstrations there could result in a supply cut that would send global oil prices to stratospheric levels.
"Clearly what happened in Saudi was a reaction to something political," said Haissam Arabi, chief executive of Gulfmena Alternative Investments, a fund management firm in Dubai. He pointed to reports of the arrest Tawfiq Al Amer, a prominent Shiite cleric, as a possible cause of the sell-off.
"Politics are still dominating the scene. It's nothing fundamental right now," he said of markets across the region.
Calls have been mounting in the conservative kingdom for change, leading the king last week to order almost $37 billion in incentives aimed at helping the country's neediest citizens.
Reflecting the kingdom's concerns about potential unrest, Tawfiq Al Amer, a leading Shiite cleric in the predominantly Sunni Muslim nation, was arrested on orders of the Interior Minister on Sunday after delivering a sermon that advocated the establishment of a constitutional monarchy, a security official said Tuesday. The official spoke on condition of anonymity because he was not authorized to speak to the media.
Saudi Arabian officials are worried that the demonstrations in Bahrain, where the Shiite majority is demanding more rights from the Sunni-minority monarchy, will enflame its own Shiite minority. Those concerns may have been reflected in the stock market.
While Saudi Arabia and other Gulf nations have promised to help ease the financial pinch for their lower income citizens, many worry that Gulf leaders' penchant for throwing money at a problem in hopes it goes away will fail this time. Demands in the region have centered on greater accountability of government, freedom of expression and deriving the authority of the government from the people.
A spillover could develop on Wednesday in other Gulf markets, most of which had closed before the reports of the cleric's arrest appeared.
The Dubai Financial Market index closed up 1 percent, recouping some of its losses on Monday, while Kuwait's benchmark index lost 2.46 percent to drop to 6,321 points. Abu Dhabi's main index closed 0.58 percent lower while Oman's benchmark, after taking a pounding a day earlier, rebounded and posted a 4.22 percent gain.
"Obviously they're going to have to price in what is going on in Saudi," Arabi said.
Kuwait faced declines because it had been closed since Thursday due to a long holiday weekend, Arabi said. So in a sense it was catching up with regional markets that had sold off earlier in the week.
"Kuwait has a mind of its own. It was closed for the national holiday, so it hasn't priced in the losses for the previous days," he said.
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AP Business Writer Adam Schreck in Dubai contributed to this report.
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