Egypt turmoil rattles Middle East stock markets
Published: Sunday, January 30, 2011 at 3:14 p.m.
Last Modified: Sunday, January 30, 2011 at 3:14 p.m.
DUBAI, United Arab Emirates — Investors nervous about instability gripping Egypt drove Middle Eastern stocks down sharply Sunday as markets reopened following a weekend of violent protests.
The losses, led by a drop of more than 4 percent in the regional business hub Dubai, reflect concerns the unrest that has roiled the Arab world's most populous country and nearby Tunisia could spread, jeopardizing an economic recovery across the region.
"There's this contagion effect, where investors are thinking: 'Well, is this going to spread out across the Arab world?'" said Haissam Arabi, chief executive of Gulfmena Alternative Investments, a fund management firm in Dubai.
Egypt's market remained closed because of the protests, leaving investors to pull money off the table elsewhere.
The benchmark index for the Dubai Financial Market tumbled 4.3 percent to close at 1,543.02.
Among the biggest losers in Dubai were real estate developer Emaar Properties, the builder of the world's tallest tower, which sank 8.3 percent to 3.11 dirhams (85 cents). Shares of discount carrier Air Arabia, which is growing its operations in Egypt, dropped 6.1 percent to 0.79 dirhams (22 cents).
DP World, the global port operator, tumbled 6.2 percent to close at 62 cents on the Nasdaq Dubai exchange. The Dubai World subsidiary is heavily dependent on shipping in the Middle East and Africa, including at the Egyptian Red Sea port of Sokhna, which it manages near the southern entrance to the Suez Canal.
Ann Wyman, head of emerging market research at Nomura in London, said protests in the city of Suez at the mouth of the strategic waterway — a key chokepoint for cargo ships and oil tankers — are making investors nervous.
"You can imagine that it is a top priority in Egypt to keep the canal open, safe and well-protected," Wyman said. "Disruption in the flow of oil is one thing that people worry about."
Other Mideast markets also suffered losses.
Abu Dhabi's main index sank 3.7 percent to close at 2,561.06. Shares of the exchange's biggest loser, Emirati natural gas producer Dana Gas, plunged 9.9 percent to finish at 0.64 dirhams (17 cents) despite assurances that its Egyptian operations haven't stopped amid the protests.
"Dana Gas Egypt is continuing with routine operations, and the production has not been affected by the current events in Egypt," CEO Ahmed al-Arbeed said in a statement.
Kuwait shares dropped 1.8 percent to close at 6,822. Qatar's benchmark index slumped 3 percent to 8,709.77.
Shares in the Jordanian capital Amman also fell, including the blue chip Arab Bank, which is based in Jordan and has branches in nearby Egypt. It fell 3.6 percent to 9.45 dinars ($13.34), outpacing the broader market decline of 2.3 percent.
A broker at the Amman Stock Exchange said the slide is "linked to the unrest in Egypt."
"It's natural that investors will be frightened by such events," he said, insisting on anonymity because he is not allowed to make statements to the media.
Saudi Arabia was the only major market to post gains, but they fell short of offsetting steep losses the previous day. The kingdom's Tadawul All Shares Index climbed 2.5 percent to 6,421.97.
Saudi shares fell 6.4 percent on Saturday, when it became the first major Arab market to reopen for business following widespread Egyptian protests that intensified Friday.