Pakistan Information & News

Stocks markets across the Arab world recorded steep losses Tuesday, with Egypt’s benchmark index hitting a two-year low while, in Kuwait, a lawyer sued to halt trading in his country’s exchange as investors found little to cheer about amid a financial crisis that has roiled global markets.On its first day of trading following a weeklong series of religious and national holidays, the Cairo and Alexandria Stock Exchange’s benchmark CASE 30 index was down by over 16.4 percent to 5,896.8, a drop that analysts attributed to the bourse reacting to precipitous slides in other world markets over the past few days.

So far this year, the CASE has been down over 4,650 points, or 44 percent.

CASE officials temporarily halted trading after shares of several major companies plummeted below the 10 percent threshold, Egypt’s Middle East News Agency reported.

Analysts said some companies saw their shares drop by as much as 40 percent, albeit on low volume trading.

“There is an element of panic in the market,” said Wael Ziada, head of Egypt research with EFG Hermes. Ultimately, “it’s not very different from the losses in the markets, in general, over the past few days.”

In Saudi Arabia, the benchmark Tadawul All Shares Index was off 7 percent, a day after hitting a four year low with a 9.81 percent drop. Dubai’s DFM Index fell 5 percent to close at 3,369.15 points, according to the exchange’s Web site.

In Kuwait, attorney Adel al-Abdul Hadi filed suit on behalf of stock broker Khaled al-Awadi to compel the government to temporarily close the exchange to curb losses. The Kuwait Stock Exchange closed down about 2.64 percent on Tuesday and had shed 3.45 percent on Monday.

The case was to go before a judge on Thursday, and reflected the level of concern in a region where even the Gulf countries’ vast oil wealth has not shielded it from the global financial crisis and, in most cases, double-digit inflation.

Kuwait’s government, like others in the Gulf region, has sought to reassure investors, stressing that it will step in, as necessary, to ward off a similar credit crunch.

Last month, the United Arab Emirates’ central bank launched a 50 billion dirham ($13.6 billion) lending facility from which local banks could draw on. Saudi Arabia, the Arab world’s largest economy, has yet to intervene but officials have indicated that the government would step in, if needed.

While world markets rebounded on Tuesday, after tumbling sharply a day earlier, the Gulf and other Arab markets have been hard hit — largely reflecting concerns in broader emerging markets.

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India unveiled a series of measures on Tuesday to tame inflation and secure food supplies, including the Reserve Bank of India’s second move this month to drain liquidity from the banking system. The RBI is raising the cash reserve ratio (CRR) by 25 basis points to 8.25 percent, its highest level in seven years, with effect from May 24, and it signalled it was ready to act again if price pressures continued to build. “It is critical at this juncture to demonstrate on a continuing basis a determination to act decisively, effectively and swiftly to curb any signs of adverse developments in regard to inflation expectations,” it said in its annual policy review. Finance Minister Palaniappan Chidambaram presented parliament with various measures, including an export tax on basmati rice to follow up on an existing ban on non-basmati rice exports. He also announced a duty cut on imports such as ferro alloys aimed at bringing down steel prices and said there would be more to come in a few days. Annual wholesale price inflation was above 7 percent in mid-April, the highest in three years, as policy planners the world over grapple with soaring food and raw material prices. India, which has about 260 million poor, is sensitive to rising prices because food often accounts for a much higher proportion of people’s expenditure than in developed economies. Fighting inflation has become a top priority for the government as it heads towards a national election due by May 2009. India’s prime minister told a group of businessmen on Tuesday the world community had not done enough to bring down food and fuel prices. “The diversion of land from food crops to biofuels and increasing use of available food grains and vegetable oils for the production of biofuels have greatly contributed to the rising food prices,” Prime Minister Manmohan Singh said. He said he was deeply dismayed by the global response to soaring energy prices, as world oil demand had risen by just 1 percent annually over the past two years while crude oil prices had shot up by over 90 percent in dollar terms. Oil hit a record high just under $120 a barrel this week. Singh said the steps taken by the government — mostly export bans and duty cuts — to ease price pressures would show results in “the weeks and months to come” and that the normal monsoon rains predicted by the weather department should help.

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