Gulf states poised to weather financial crisis

By Julia Wheeler
BBC News, Dubai

Kuwaiti trader

Gulf stock exchanges are apt to exaggerate volatility felt elsewhere

Gulf stock markets are not immune to the global battering the current tornado of volatility has brought.

In Saudi Arabia, there has been a 45% drop in share values this year and it is the same story in the United Arab Emirates’ commercial capital, Dubai.

It began with foreign investors pulling out. Local investors followed suit.

Across the region – including in Saudi Arabia where 90% of those investing in markets are estimated to be locals – the plummet has continued as investors became nervous, more risk averse and felt the need to deleverage.

The world becomes flat. There are no island economies anymore
Mahdi Mattar, of Shuaa Capital

“Cash is king,” says Dr Mahdi Mattar, Chief Economist at Shuaa Capital, based in the high-rise, hi-tech, Dubai International Financial Centre.

“This is not just a slowdown in the US or Europe, it is one of the biggest financial crises we have seen,” he said. “In those circumstances the world becomes flat. There are no island economies anymore.”

 

continue reading at                       http://news.bbc.co.uk/2/hi/middle_east/7660543.stm

 

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