ID :
27240
Wed, 10/29/2008 - 14:39
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https://oananews.org//node/27240
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Al Suwaidi says crisis is transitional
Abu Dhabi, Oct 29, 2008 (WAM) - The Governor of the UAE Central Bank yesterday blamed foreign investors and panicking small dealers for persistent turbulence in the Gulf stock markets but played down the upheaval as a transitional reaction to the global fiscal crisis according to a report by “Emirates Business”.
Sultan bin Nassir Al Suwaidi said the UAE and its partners in the six-nation Gulf Co-operation Council (GCC) should not underestimate the international financial crisis and urged them to be careful despite its minimal impact on the region.
Suwaidi said this as the GCC stock markets continued their sharp fluctuations and dived by more than US$188 billion (Dh689.9bn) through October. "Stock markets are normally affected by the psychological reaction and attitude of small investors, who panic and opt out quickly," he told Abu Dhabi television.
"The entry of too many foreign investors into the GCC markets, mainly the UAE, and allowing them to trade freely also have negative repercussions on these markets in time of crises. This is what is happening here and that is why I don't think it's a major problem but a temporary reaction to the global crisis."
Suwaidi said the GCC markets and economies could be affected but added the impact remains minimal compared to other countries.
"But that does not mean we should underestimate that crisis or sit back complacently… we should remain vigilant and ready for any event. Yet I still say that there is no fear or real concern about our country."
Official figures released yesterday showed the seven bourses in the GCC, including two in the UAE, continued to bleed to extend a painful declining and fluctuating trend that started in early summer.
From around US$923.72bn at the end of September, the combined market capitalisation of those bourses plunged to nearly US$734.89bn on October 27, a loss of about US$188.83bn, or an average daily drop of US$7bn, according to the figures by the Abu Dhabi-based Arab Monetary Fund (AMF). Saudi Arabia, the Middle East's largest and most speculative exchange, was the main victim this month, dipping by around US$90bn to US$289bn on October 27, its lowest capitalisation level in more than two years.
Kuwait plummeted by around US$33bn, while Qatar tumbled by nearly US$26bn. Abu Dhabi and Dubai lost around US$12bn and US$19bn respectively while the loss was around US$4bn in Oman and US$3bn in Bahrain.
Suwaidi's remarks echoed statements by other Gulf officials that the GCC markets are gripped by fear and the decline has nothing to do with fundamentals.
"The economies of Saudi Arabia and other Gulf states do not have any problem as they have not been affected by that crisis," said Abdul Rahman Al Tuwaijri, Chairman of the Saudi Bourse Authority. "What is happening in the local stock market is just fear from what might happen not what is there."
In Oman officials and experts agreed that the markets are under the strong influence of fear and called for government intervention.
"What we need now is an urgent measure from the government to save what can be saved," said Nabil Al Baloushi, CEO of the Muscat-based Tawasul Company for Financial and Investment Services.
"The situation is no longer assuring and the government should now go beyond words and interfere."
"Our investors have suffered from big losses and they are really a big loss for the national economy," said Sheikh Mohammed Al Marhoun, an Omani businessman. "Restoring ' confidence now cannot be done through statements but actions. We urge the government to act," he said.
Sultan bin Nassir Al Suwaidi said the UAE and its partners in the six-nation Gulf Co-operation Council (GCC) should not underestimate the international financial crisis and urged them to be careful despite its minimal impact on the region.
Suwaidi said this as the GCC stock markets continued their sharp fluctuations and dived by more than US$188 billion (Dh689.9bn) through October. "Stock markets are normally affected by the psychological reaction and attitude of small investors, who panic and opt out quickly," he told Abu Dhabi television.
"The entry of too many foreign investors into the GCC markets, mainly the UAE, and allowing them to trade freely also have negative repercussions on these markets in time of crises. This is what is happening here and that is why I don't think it's a major problem but a temporary reaction to the global crisis."
Suwaidi said the GCC markets and economies could be affected but added the impact remains minimal compared to other countries.
"But that does not mean we should underestimate that crisis or sit back complacently… we should remain vigilant and ready for any event. Yet I still say that there is no fear or real concern about our country."
Official figures released yesterday showed the seven bourses in the GCC, including two in the UAE, continued to bleed to extend a painful declining and fluctuating trend that started in early summer.
From around US$923.72bn at the end of September, the combined market capitalisation of those bourses plunged to nearly US$734.89bn on October 27, a loss of about US$188.83bn, or an average daily drop of US$7bn, according to the figures by the Abu Dhabi-based Arab Monetary Fund (AMF). Saudi Arabia, the Middle East's largest and most speculative exchange, was the main victim this month, dipping by around US$90bn to US$289bn on October 27, its lowest capitalisation level in more than two years.
Kuwait plummeted by around US$33bn, while Qatar tumbled by nearly US$26bn. Abu Dhabi and Dubai lost around US$12bn and US$19bn respectively while the loss was around US$4bn in Oman and US$3bn in Bahrain.
Suwaidi's remarks echoed statements by other Gulf officials that the GCC markets are gripped by fear and the decline has nothing to do with fundamentals.
"The economies of Saudi Arabia and other Gulf states do not have any problem as they have not been affected by that crisis," said Abdul Rahman Al Tuwaijri, Chairman of the Saudi Bourse Authority. "What is happening in the local stock market is just fear from what might happen not what is there."
In Oman officials and experts agreed that the markets are under the strong influence of fear and called for government intervention.
"What we need now is an urgent measure from the government to save what can be saved," said Nabil Al Baloushi, CEO of the Muscat-based Tawasul Company for Financial and Investment Services.
"The situation is no longer assuring and the government should now go beyond words and interfere."
"Our investors have suffered from big losses and they are really a big loss for the national economy," said Sheikh Mohammed Al Marhoun, an Omani businessman. "Restoring ' confidence now cannot be done through statements but actions. We urge the government to act," he said.
