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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (7454)	11/21/2006 6:32:31 PM
From: John Pitera	Read Replies (1) \| Respond to of 33421

Fears of dissent as Saudi bourse tumbles again Monday, November 20, 2006 6:22:54 AM (GMT-06:00) Provided by: Reuters News By Andrew Hammond RIYADH, Nov 20 (Reuters) - A sharp correction on the Saudi stock market this month has revived fears of another price collapse that could sow dissent among millions of Saudis who saw savings evaporate earlier this year. The largest bourse in the Arab world lost a quarter of its value in the space of 10 days after the popular evening trading session was scrapped on Oct. 28, prompting panic selling in a market that some analysts say is still partly overvalued. Newspapers have reported day traders losing up to 80 percent of their holdings and Internet chatrooms have reflected much anger in a country where millions have played the market with official encouragement in the hope of making a quick buck. "Believe me I have lost more than three quarters of my money and all there is is silence ... my sense of nationalism has disappeared with my money," wrote a user calling himself "Baqaya Jurouh" (Wound Marks) on one site. But it has also been a case of deja-vu. The bourse lost half of its capitalisation in a February to May crash that burnt the fingers of some 3 million Saudis who regularly played the market but, lacking knowledge of market fundamentals, were easy prey for sophisticated speculators. Analysts said less Saudis were affected this time, muting the government's fears of public dissent getting out of hand. Investors in Kuwait protested outside their stock market building earlier this year -- a scenario Saudi Arabia, an absolute monarchy with no political parties, dreads at home. In April the government appeared to react to popular anger over the first market collapse by replacing the head of the market regulator and slashing fuel prices. "In February everybody and anybody invested in the stock market, and those who have remained were prepared to take risks," said Shakeel Sarwar, head of asset management at SICO Investment Bank in Bahrain. "There are retail investors in the market, but it's definitely less," he said, adding that some small and medium stocks favoured by speculators were still overvalued. ONCE BITTEN...? Turki Fadak, an analyst with the Saudi Economic Association, estimated that of some 1.5 million Saudis still trading daily, up to 1 million have lost heavily this month. "I seriously doubt these people have any investment sense at all," he said. Government concerns are compounded by the fact that it was the state who encouraged ordinary Saudis to subscribe to a raft of initial public offerings over the last two years as a way of spreading the wealth accruing from the world oil price boom. Rochdi Younsi, an analyst with Eurasia Group, said the greater threat to the authorities came from radical Islam. Militants linked to al Qaeda launched a campaign in 2003 to bring down the U.S.-allied Saudi monarchy. "The only risk comes really from the Islamists, some of whom could use these losses to undermine the monarchy by claiming that it is promoting a form of gambling," he said. The travails of the stock market have prompted the Capital Markets Authority (CMA) to speed up plans to impose more controls and transparency on a market that is still closed to foreigners but falls short of many international standards. Some commentators suggest privately that the CMA would prefer that unsavvy retail investors exit the bourse. An IPO conference was cancelled in Riyadh this week because of unspecified "sensitivities" cited by organisers. Simon Williams, an economist at HSBC Middle East in Dubai, said the government would at least have to rethink its policy of rolling out IPOs to net as many ordinary Saudis as possible. "The pricing has been low with guaranteed return, but they want markets to be driven by market forces and accurately valued. This creates an ambiguity in the minds of retail investors," he said. "There is an issue there for the CMA."

To: John Pitera who wrote (7454)	11/21/2006 7:32:10 PM
From: Louis V. Lambrecht	Read Replies (1) \| Respond to of 33421

John, could you elaborate a bit on the signs you are watching. Re: Iceland, I only was watching the Kronor in the assumption that: one of the few countries to still have a central bank and a possible escape to safety currency. Lost >20% value between Nov 2005 and April 2006 (more in EUR, 71 to 97 ISK for one Euro) and rebound failed in Oct last. Hungarian Forint and the NZ Dollar took a hit in the same period, to a lesser extend. What worries me more in the article is the phrases as "as long as they can service the debt", which will be IMVHO the next financial system. While individuals or even sound companies (low debt ration) face foreclosures or bankrupcy, companies up to the neck in debt will be helped out with other loans as long as the debt can eventually be serviced. In short, confiscation of wealth/destruction of capital replaced by a debt servicing system. This could work forever, even in *anyflation, de-, re-, in-... not even an M3 anymore to know where is too far. Until stoopid un-patriotic persons would refuse yet another loan and request to work but for food. Where to hide?