Middle East Analysis
Saudi king has fired the Chairman of the Saudi Financial Market Authority. The new man said the weak market performance does not reflect the strength of the Saudi economy or the soundness of their policies…..yadda, yadda, yadda. Presumably he means that the market should move exactly with oil prices. But then these are not shares in the Saudi oil revenues that are being traded. Oil prices have not changed all that much since last year, they have fluctuated around $70.
Most comments from the public were supportive of the move. Now the Saudi authorities have blamed the head of the market supervisory authority for the decline- but the announcement did not clarify how he can be responsible for liquidity moving out of domestic stocks. Besides, now the government has implicitly promised investors that the market will get better, that prices will rebound. Over last week Saudi shares declined by 21%, while Dubai shares declined by 15.3%. Other Persian Gulf markets also declined by smaller percentages. The Saudi market has lost about 51% of its market value over the past three months.
In view of this recent kingly decision, the other Gulf rulers may feel that they have to do something similar to keep up with the Saudi Joneses. All have come under political pressure and are considering changes in market rules as well, some of which will restrict the ability of day trades to sell within the same day in order to take profits. However, such a measure may have the opposite effect, because they will also reduce daily trading activity in these small markets and reduce demand for local shares. In any case, we should soon see a slew of other kingly, princely and sheikhly edicts, recycling top officials, replacing several tweedledums with new tweedledees.
Clearly, the notion that making guaranteed profits in the stock market is an entitlement that is now deeply rooted in the Gulf States.(Actually Gulf markets started to rise on the day after the hapless Saudi director was fired- imagine if all Gulf states fired their stock market chiefs, how much the markets would appreciate. Or better yet, imagine if whole cabinets are fired and sent packing to their London mansions:))
Speaking of which, perhaps Ben Bernanke and his sidekicks, now that they have raised rates 16 times, will let old Alan Greenspan’s ghost R.I.P and quit raising rates and messing up the economy and the markets. Maybe the whole FOMC should be sent over to the Persian Gulf. They can hold their meetings in exciting downtown Riyadh or on board an aircraft carrier- maybe they can accommodate them around the old swimming pool at camp Doha, nestled at the foothills of Mutlaa Ridge, but I’d stay away from that beach, the water is as toxic as the smell warns you that it is. (Fallujah is not safe enough yet for the FOMC, but perhaps after one more rate raise it would acquire new charms. I hear that Tel Afar is getting better).
Tensions are rising in Egypt, as the government tries hard to turn the clock back and end open dissent. But it looks like the opposition, whoever they be, are smelling figurative blood now, and perhaps it is true- you really cannot push the toothpaste back into the tube.
New twist: according to al-Arabiya TV, Sudan- yes, you read right- has sent an envoy to Beirut to mediate between Lebanese factions. On a different note, the station also reported that a Saudi groom beat his bride on their wedding night so severely that she has been kept in intensive care. The man said his mother had told him that is how he will guarantee a lifetime of respect and obedience from his new wife.
Cheers
Mohammed
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