Dubai, Oct 9 (IANS) Saudi Arabian investors are feeling let down by what they say was inaction on the part of their central bank as the Saudi bourse went into a free fall in the wake of the global credit crunch.
Reopening Monday after the Eid-ul-Fitr holidays, a day after the rest of the Gulf market opened, 10 percent of the key Saudi stock index Tadawul's value was wiped off.
The exchange, among the worst hit Gulf bourses, fell to a 52-week low of 5,696.01 Wednesday before ending the day at 6,160.52, 1.49 percent down from the previous day's close. Year-to-date the index fell by 43 percent.
"The signs of the crisis are there since the Lehman Brothers' bankruptcy Sep 16 but nothing was done, no interference or even assurance was made leaving people to face speculation and panic," Sanhat Al-Otaibi, professor in the Business Administration Department of King Saud University, told Arab News.
"For the last two years we were facing a crisis while the rest of the world markets were robust and it is ironic that our market is affected even harder than the American or the European markets now," the report quoted Tariq Al-Sakkat, an investor in the market, as saying.
On Wednesday, the central banks in the United Arab Emirates (UAE) and Kuwait announced interest rate cuts to address the situation in their respective markets but the Saudi Arabian Monetary Authority (SAMA) has not followed suit yet.
However, SAMA deputy governor Mohammad Al-Jasser told a television channel that Saudi Arabia's economy and financial institutions would not be greatly affected by the global financial crisis as these have not been exposed to the international financial institutions that faced problems in recent times.
He said the Saudi economy has never witnessed problems in liquidity, and that there was a 21 percent growth in the last eight months compared to 18 percent last year.
"We are not facing any problem as regards liquidity in the Saudi economy," he said.
But Al-Sakkat is not convinced.
"The assurance is not convincing, as the trust is lost in the Saudi Arabian Monetary Agency and the officials," he said.
According to Abdul Aziz Al-Khaldi, branch manager at Samba Financial Group in Riyadh, investors panicked due to lack of official intervention and started selling.
"Investors expected officials to step out with a statement to assure or even explain to them what is happening," he said.
Al-Otaibi, on his part feels that, the market should have been kept closed till the global crisis got over.
"The Saudi market should have stayed closed as a continuity of the (Eid-ul-Fitr) vacation, until the international situation was cleared," he said.
"The Gulf market opened before the Saudi market and the symptoms of a drop were showing, why didn't the officials monitor the Gulf and international markets and delayed the opening?" added Al-Sakkat.
Meanwhile, Saudi Crown prince Sultan Bin Abdul Aziz told reporters that the country was exploring ways to address the prevailing situation in the markets.
Asked whether any steps were being taken to safeguard the interests of Saudi investors, he said King Abdullah Bin Abdul Aziz has entrusted various agencies to study the issue.
"This is an international issue that does not concern us alone. However, Custodian of the Two Holy Mosques King Abdullah has entrusted a number of responsible agencies to make in-depth studies on how we can deal with this situation. If Allah wills, matters will improve," he said.
|
|
Read More: Leh
Comments:
